How Dilip Shanghvi scripted a dramatic turnaround for Sun Pharma

For someone who leads the country’s largest pharmaceuticals company, 67-year-old Dilip Shanghvi is painfully low profile. But despite the reluctance to be in the public eye, the reclusive billionaire, who features among the Top 10 richest people in India, has been hard at work to script a dramatic turnaround in fortunes for his company, Sun Pharmaceutical Industries Ltd. Between 2014 and 2018, Shanghvi had been navigating choppy waters. Intense pricing pressures in the US market—where Sun Pharma is a major player—together with regulatory issues and product recalls had been keeping the company’s management on their toes. Besides, its mega acquisition of Ranbaxy Laboratories in 2014 also brought its own set of challenges, especially problems around regulatory compliance, requiring Sun Pharma to improve quality control and manufacturing processes. This apart, the $4-billion acquisition meant the need to focus on debt restructuring and cash flow management. In FY18, the company’s profits plunged 70 per cent to Rs 2,096 crore, and it was clear some strategic moves were urgently required.

Cut to 2023. In FY23, Sun Pharma registered its highest-ever consolidated revenue of Rs 43,279 crore and net profit of Rs 8,474 crore, signalling to the market that the company was back in the game. How did the company—which pulled off several acquisitions between 2016 and 2023 after the Ranbaxy buyout—manage this dramatic turnaround? In our cover story, Neetu Chandra Sharma pieces together the Shanghvi formula for turnaround and growth, and traces how Sun Pharma regained lost ground. Over the past five years, one of the main ingredients of its success strategy has been a sharp focus on its specialty business where it identified dermatology, ophthalmology and onco-dermatology as areas where it would concentrate, also because the biggest players were not too interested in these segments and the company realised that it had room to grow in them. It then went about building R&D capabilities and picking up acquisitions to bolster this strategy.

On the generics side, Shanghvi was clear that he would continue to take on the biggest players and grow that side of the business even more. This dual strategy for specialty and generics has turned out to be a winning one. Sun Pharma is also witnessing healthy growth in core geographies within emerging markets and good growth in its India business. But the specialty push has become key to the company’s future plans. “We will continue to look at interesting opportunities in dermatology and ophthalmology; products in Phase III or products close to market is where we will invest so that we are able to bring them to market faster,” Shanghvi says in an exclusive interview to Business Today.

Elsewhere in this issue, Binu Paul examines a key development in the Indian venture capital ecosystem—the birth of Peak XV Partners—a VC giant born as a result of the three-way geographical split of marquee global investment firm Sequoia. With greater freedom now to double down on the India opportunity and also go beyond Indian borders, Peak XV has an exciting—but equally daunting—future ahead.