India's pharmaceutical industry has minted plenty of billionaires and Sun Pharmaceutical founder Dilip Shanghvi is among those. But with his company set to take over Ranbaxy Laboratories, Shanghvi will become the richest man in India.
That is according to the calculations of the Times of India, which says that with his 63% ownership of Ranbaxy, Sun and the separate R&D operation, Sun Pharma Advanced Research, he has a worth of about Rs 1.46 lakh crore ($23.42 billion). That will move him past Mukesh Ambani, who controls Indian energy company, Reliance Industries, whose market holdings add up to Rs 1.32 lakh crore ($21.2 billion), the newspaper figured. Bloomberg has placed Ambani 33 on its list of richest people in the world.
The combo with Ranbaxy will make Sun a significant force in the world market by any number of measures. It will be India's largest drugmaker, the largest Indian drugmaker selling into the U.S. market and the fifth-largest generic company globally with combined sales of $4.2 billion. That compares to Teva Pharmaceutical Industries ($TEVA), which claims the title of largest generics maker in the world, and last year had revenues of $20.3 billion.
One reason for Shanghvi's current spot at the top of the list is the soaring value of Sun shares, which are up 50% for the year. Of course, paper holdings are constantly changing and how well his shares perform going forward will depend on how well he executes with Ranbaxy. And that means turning around Ranbaxy's issues with the FDA, which he has pledged to do.
Four of Ranbaxy's 5 manufacturing plants, all in India, are currently banned from selling into the U.S. and operate under a consent decree. Only is Ranbaxy's Ohm Laboratories plant in New Jersey currently able to provide drugs to the U.S., the largest market for both Ranbaxy and Sun. Those limitations recently led the FDA to strip Ranbaxy of its first-to-file right to produce a generic of AstraZeneca's ($AZN) blockbuster heartburn med Nexium, as well as Roche's ($RHHBY) antiviral Valcyte, which returned Ranbaxy earnings to a loss in the last quarter.
But Shanghvi, who started Sun in 1982 with an investment of a couple of hundred dollars, has been a savvy operator. He has done more than a dozen deals in the last 15 years or so to build Sun into a major player, including a protracted wrestling match with Israeli drugmaker Taro Pharmaceuticals to get control of it. Several years ago, he set his sights on getting a bigger piece of the U.S. market and many observers thought that meant buying a U.S. company. But with the all-stock deal for Ranbaxy, he will get a much bigger slice of the American pharma pie at a very cheap price, the kind of dealing from which billionaires are made.
- read the Times of India story