Ranbaxy manufacturing management said to be in Sun's sights for cuts

Sun Pharmaceutical Managing Director Dilip Shanghvi

Sun Pharmaceutical is expected to start looking at the management of some of the Ranbaxy Laboratories manufacturing sites, with an eye toward flattening out the chain of command, as Sun Managing Director Dilip Shanghvi continues to clean house after completing the Ranbaxy acquisition.

When Sun completed the $4 billion buyout in March, Shanghvi reiterated his pledge to return the four Ranbaxy plants that have been banned by the FDA from shipping to the U.S. to the agency's good graces. That more than cost-cutting, Shanghvi explained, would help pay for the acquisition. He also said that the integration of Ranbaxy would be done with a minimum of layoffs.

But minimum doesn't mean none and the Economic Times says about 150 execs are being let go, or are leaving of their own accord. The most recent is Rajeev Sibal, who led Ranbaxy India operations. Manufacturing at Ranbaxy's Indian plants is what led the drugmaker into trouble. The newspaper says Sibal is thought to be headed to Lupin to oversee the competitor's India and emerging markets operations. His exit follows the departure last month of 18 execs, including Ranbaxy President and CFO Indrajit Banerjee and VP of marketing Maninder Singh.

That turn around of the four Ranbaxy plants in India will not be easy given the depth of their issues. Not only are they banned, but they operate under a court-ordered consent decree that requires oversight by outside auditors. Only its Ohm Laboratories plant in New Jersey is still able to produce drugs for the U.S.

The bans have dramatically cut Ranbaxy's earning potential, not only from sales of approved drugs, but more importantly, by keeping it from launching new generics from the four banned, and key, plants. This year, the FDA pulled Ranbaxy's 180-day exclusives for generics of AstraZeneca's ($AZN) heartburn drug Nexium and Roche's ($RHHBY) antiviral Valcyte because of its manufacturing problems.

- read the Economic Times story