Monday, April 7, 2014

A problem shared is a problem halved?

In a move that should come as no surprise, Daiichi Sankyo, the Japanese owners of the embattled generics manufacturer Ranbaxy, have offloaded their problematic affiliate onto Sun Pharma. The deal, valued at $3.2 billion, will create the fifth-largest generic drug maker in the world, both of whom have been hit with bans from the USFDA for quality control violations.

Ranbaxy's low valuation is a testament to the struggles the company has undergone in recent times, leading to a steep decline in its share prices. Malvinder Singh, the former owner of Ranbaxy, lays the blame squarely at Daiichi Sankyo's door, saying that they "failed to harness and assimilate the complexities of running a strong generics business".

Ajay Piramal, the billionaire owner of the Piramal Group, which includes the pharmaceutical company Piramal Healthcare, has also been quoted as saying that "(Daiichi) has not been able to handle all the quality and FDA issues. I think that Sun is much more competent to do that." Oddly enough, he also looks upon the deal as "one company which has not had any issues, trying to correct another one."

I find these comments to be disingenous at best, and dishonest at worst. The Fortune article that took the lid off Ranbaxy's woes described a well-entrenched, institution-wide culture of playing fast and loose with the rules, with predictably disastrous consequences. In the face of such widespread flouting of ethical norms, Daiichi would have had to do a massive cleanup, assuming they were ever apprised of the full extent of the problem. Of course, it may suit Ranbaxy's former owner to blame anyone but himself. But I fail to understand why someone of Ajay Piramal's standing in the pharma community would blandly gloss over Sun's regulatory troubles, and make the entire deal seem like a benign takeover that can only be good for Indian pharma.

This is not to say that any pharma company running into regulatory issues should be tarred and feathered. If they are able to address such problems in a satisfactory manner, there isn't anything to be concerned about. The real problem is when industry leaders bury their heads in the sand and are so busy pointing fingers at others that they fail to acknowledge the very real problems besetting the Indian pharma industry, and the growing global perception that Indian-made generics are unsafe and dangerous for public consumption. Once that image sticks, it's very hard to shake off.

No comments:

Post a Comment