Sources: Sun has blueprint for turning Ranbaxy around

Sun Pharmaceutical execs acknowledge it will be no easy task to repair Ranbaxy Laboratories' damaged reputation with the FDA and the public. But Sun managing director Dilip Shanghvi and his lieutenants came in with a laundry list of actions to be taken quickly to jump-start the process, sources tell Reuters.

"Sun (Pharma) will now have to do a series of things, starting with building faith and trust with the FDA and making some changes in the management to improve oversight," a source told Reuters. "It will be a series of measures to demonstrate credibly that they are on the job."

While execs will not discuss specifics of what will be needed to extract a return from Sun's $3.2 billion all-stock deal to take over Ranbaxy, sources tell Reuters that among the first actions will be to replace the management at the four plants the FDA has banned from shipping to the U.S. The FDA and other regulators can also expect a lobbying campaign to allow Sun to reopen the plants. They may be invited in for a visit to access progress once some changes have taken place, as a "confidence-building measure" that it is on track, a source told the news service.

The FDA is not the only regulator to be won over. The EU has also been inspecting some of Ranbaxy's facilities and reported Wednesday that Indian authorities had withdrawn permission for at least one of the plants already banned by the FDA from exporting products. That formalized an earlier voluntary move by Ranbaxy to quit shipping products from two Indian plants to the EU.

To change the attitude of doctors who have become suspicious of Ranbaxy brands after years of public actions by the FDA, Sun intends to eliminate the Ranbaxy brand in the U.S. and replace it with Sun Pharma, sources said. The brand would be retained in markets where it is an asset.

Uday Baldota, Sun Pharma's senior vice president of finance and accounts, would not respond directly to whether the Ranbaxy brand would soon be history in the U.S. but did say: "Overall [the] Ranbaxy brand has a value. We will find ways of using it and preserving it."

Baldota acknowledged that returning Ranbaxy to being a fully productive and highly regarded operator will be no easy task but said Sun should be up to it. "In absolute size it is the largest challenge that we've had," Baldota told Reuters. "It will take time. It is not going to come easily. It will take a lot of effort, but hopefully we should be able to help them resolve the problem."

- read the Reuters story