What the Indian government should be asking about Ranbaxy selling itself to a Japanese drug giant is what this says about the state of India’s pharma industry. Takeovers are a dime-a-dozen, but this was India’s largest drug firm and a technology bellwether. The pharma industry gets its fair share of praise for being part of the India Shining story. But, it works in a far more hostile environment then, say, software.
First there’s the patent problem. In pharma, the game is all about intellectual property. The Big Boys spend billions in R&D to find the one or two blockbuster drugs that make them even more billions. Indian firms don’t have such deep pockets, so they have focused on the $ 125 billion generic drug market. But to win the right to make generics often means long and expensive legal battles.
Second, there’s the sarkari problem. Ministers in charge focus mostly on grandstanding about how they will make medicine prices go down. Present incumbent Ram Vilas Paswan regularly makes claims about drug prices in India that are false or whimsically reinterprets industry regulations. Swati Piramal of Piramal Healthcare was recently left to plead for ‘a pro-industry policy’ — or see more desi firms seek foreign embraces.
And to add to the woes, there is no policy vision. “In the past three or four years there has been no policy. The government has not spelt out on which direction domestic formulations should go,” says Sanjiv Kaul, managing director of ChrysCapital.
So the real surprise will actually be if more Indian firms don’t take the path of Ranbaxy.
India has arrived. I was delighted at the news of Ranbaxy selling out to Daiichi Sankyo. And why not? Of what use is Indian entrepreneurship if it can’t be sacrificed at the altar of avarice? Of what use is it to build businesses taking every conceivable favour from Indian governments, be it on patent extensions or on ever-greening amendments if it cannot help valuations. Pearl Harbour in Gurgaon, one would say.
So what if in the ultimate analysis the Ranbaxy boys only net Rs 10,000 crore? So what if the Japanese company finally raises prices of every life-saving drug? The boys are astute businessmen. Why would they not happily surrender all that their grandfather and father built? Who cares about legacy? It’s not the past, but the present that drives our stature. It is another matter that this deal will benefit only a couple of people. The pink papers will hail it as a vindication of Indian business rather than the pathetic sell-out that it is.
My suggestion to this aam aadmi government: privatise all critical industries with greater vigour. We need to threaten our food security; we need increased prices of basic medicines while Anbumani Ramadoss fiddles with AIIMS. My appeal to the PM is to give the Ranbaxy Boys a recognition denied to their grandfather so that more Indians sell out their businesses to prove to the world that India has arrived.
Suhel Seth is Managing Partner, Counselage.