Since Sun’s acquisition of Ranbaxy Business-Standard, Economic Times and other papers have published many stories related to good and
wonderful nature of the deal. I am sure everyone in India wants this to be a
success and recoup the lost pride in Ranbaxy’s demise. However, no one wants to
address or publish or discuss anything about the challenges Sun will face to
get everything running full speed. Some of issues, especially personnel, Sun
will have to deal with are generally considered taboo.
In India businesses started are generally passed on to the coming
generations. Before the launch of economic revolution in 1991 handful of
companies were interested in India. Not very many companies are bought and sold
in Indian culture. A sale to a competitor basically meant the entrepreneurs had
failed, a setback in community. With that context acquisition of Ranbaxy by an
Indian company has caught everyone by surprise and even pride. Ranbaxy has come home. Ranbaxy was part of the elite; the biggest pharma in India and its sale
to Daiichi Sankyo was a loss.
Sun’s acquisition of Ranbaxy besides financial benefits
creates unprecedented opportunities to change the global landscape. It will
face significant issues that any other Indian companies have not encountered on
its scale. For its success it will have to deal with them. How they will manage
and handle assimilation will determine Sun’s success.
Sun’s highest priority is get the sites approved from USFDA
and other regulatory bodies ASAP to earn the trust and revenue it needs to
implement changes. To achieve success Sun will have to deal with technology and
human side of the organization. They will have to be dealt with very gently. I
believe such an endeavor on this scale that has global implications has not
been dealt in Indian business.
On human side, personal and personnel issues may become the
biggest hurdle. Colleagues of yesterday could challenge boss-subordinate
relationships of tomorrow and that may impede assimilation. Sun’s way of
managing and cajoling Indian psyche would be put to ultimate test. It might
have to invent new and different ways and methods to develop strong and
cohesive teams that will deliver on its goals.
On technology side Sun has to figure out how to move from
every pharma company’s practice of “regulation centricity” to “process
centricity” i.e. have complete command of the processes so that they can exceed
regulations. This is a unique opportunity and not very many get it. It could be
called once in a lifetime opportunity to change the global pharma playing field
by showing how quality can be produced while lowering costs and improving
profits. Complete and parallel review of the business model could create a
model that could deliver quality and quantity on patient demand.
Benefits of process centricity if adopted can change the
playing field in many ways. Stakeholders will have command of the processes and
that means they will be able to rationalize global businesses for their
products. Economies of scale will lead to commercialization of the best
technologies which in turn would mean the producers will know that they have
control of every aspect of manufacturing, quality and supply chain. Used
technologies will exceed regulations and that would be something new and
unheard of especially in pharma. Quality will be built in their processes
rather than achieved through “trial and error” process.
Sun could step out of the pharma’s “me-too” model box and
show how “process
centricity” can change the playing field as it exceeds regulations and
produces quality products with minimal in-process analysis. Such an achievement
could change the global playing field forever. Ranbaxy had this opportunity in
2008 but did not take advantage of the opportunity. May be Sun will avail the
opportunity and put the pride back for Indian management.
For assimilation to happen perfectly each wheel will have to
turn at speeds to deliver the combined expected result. I am sure Sun’s team is
well aware of the challenges they will face and were part of the acquisition
consideration equation. I hope they have the resources and are willing to tap
into resources to achieve their objectives.