Dilip Shanghvi | Outlook Business
Home  /  Specials  /  The Boss  / Dilip Shanghvi | JUL 02 , 2015

The Boss

Dilip Shanghvi
The Sun Pharma founder is a man of few words and the perfect dose of calm and strength

Krishna Gopalan

"Opportunity belongs to those who understand what it takes to be a leader and determinedly harness that understanding" — Dilip Shanghvi, founder, Sun Pharma 

It took just three words from India’s most reticent businessman to change Sundaresh Raju’s life. It is with a sense of pride that Raju says he was employee number 44 at Sun Pharmaceutical Industries. He joined the company, then housed in a small office in the Mumbai suburb of Vile Parle, on the first day of 1987 as sales manager and spent the next 17 years there before calling it a day. “The shrewdness and maturity that is associated with Dilip Shanghvi today was obvious even then,” says Raju, who was coaxed into joining the company from Tamil Nadu Dadha Pharmaceuticals (TDPL), where he was comfortably placed.

Sitting at his Janakpuri home in Delhi on a hot afternoon in July, Raju was quite perplexed to see Shanghvi at his doorstep. He had come in unannounced after hailing a taxi from Connaught Place. Raju had known Shanghvi’s father Shantilal for a while, since he was a distributor of TDPL, Torrent Pharmaceuticals and a few other companies from Kolkata. He had met Shanghvi on a couple of occasions, though there was never any serious conversation.

Shyamal Ghosh, former executive director, Sun PharmaThe young man, who was barely 32, was then as straightforward as he is known to be now. He spoke briefly about his five-year-old organisation before looking Raju in the eye and saying, “Please join me.” Raju, while laughing about the story today, admits to then being a little unsure, since Shanghvi was young and without a track record. “I was 45, with parents, a wife and children to take care of, besides having a pretty secure job. It was not an easy decision,” he says.

After many rounds of conversation in Mumbai and Vapi, where the company had a factory, Raju decided to back “the entrepreneur with fire.” Impressed by his focus and clarity, he bought into the story. “Dilipbhai is extremely shrewd when it comes to judging people. He has the ability to identify the right man for the job,” says Raju. 

Making a mark

Entering the pharma business with a commerce background, Shanghvi was very clear he would need to hire seasoned hands to turbo-charge his growth. He was familiar with the industry, having worked with his father during his college days, and had branched out on his own. From modest beginnings in 1983 with a capital of ₹10,000 to becoming India’s largest pharma company — with a market share of 9% — and the world’s fifth-largest generics player, Shanghvi’s ability to pick the right people has been crucial to his success.

For instance, building a sales force is critical for a young pharma company and Raju, who not only had a career in selling but also excelled in training sales people, was definitely the right fit. “In the early days, he would speak of selling as being more important than brand-building,” says Raju. In Shanghvi’s mind, the customer was the doctor and it was much more important for the company to win him over and get more prescriptions than to win the end-consumer — the patient. That was the priority.

“We went on to build the best sales team in the industry. Almost 90% of our team would meet their targets. I developed the processes and systems to develop and train the sales team that are still being used by the company, says Raju, who later moved to head training and development at Sun Pharma.

As the company turned more global in nature, Shanghvi roped in Kal Sundaram in 2010 as CEO and additional director on the company’s board. Prior to this, Sundaram was the managing director of the Indian arm of GlaxoSmithKline Pharma and had spearheaded its emerging markets strategy. Sundaram is now the CEO at Taro. Two years later, he hired Teva’s former CEO Israel Makov as Sun Pharma’s chairman.

Makov was responsible for driving Teva’s revenue from $2 billion to $8 billion during his five-year tenure. Makov’s brief is to drive Sun’s next-step transformation into a global specialty pharma company. And, like Raju, both of them had been on Shanghvi’s radar for a while. Shanghvi was in talks with Kal Sundaram for three years and with Makov, Shanghvi picked up a stake in his firm in a bid to test the waters and see if they could get along.

Shanghvi has always been able to attract the best in the industry because behind the audacious dream is a very well-thought out strategy. Even as early as 1991, Shanghvi often spoke at meetings of being among the top ten pharma companies over the next 5-10 years. “We were a little amused initially, but soon realised that the man meant business. When other pharma companies were growing each year by 15%, Sun was growing at 70-80%,” recalls Shyamal Ghosh, whose last assignment at Sun was as head of its Bangladesh business.

Balaji Mosur, former head, API business, Sun PharmaIt has been four years since Ghosh called it a day at Sun Pharma. When he joined the company in 1991 at Vadodara in the marketing planning function, he was struck by the number of meetings held, all of them related to the launch of new products. For Ghosh, who joined Sun Pharma from Sarabhai Chemicals — where meetings of this nature would take place once in two years — this was alien.

“Besides, if Sarabhai was a 9-5 job, it was 9-9 here, with the boss being absolutely hands-on,” he says. Shanghvi knew that in order to get Sun Pharma into the top 5-10, new product introductions would play a critical role.

Unwavering perseverance

In the initial years, Shanghvi was involved very closely with product strategy and the marketing team reported directly to him. Ghosh remembers the time the company launched Clozapine, a medication for the treatment of schizophrenia, in 1993. They came to know Sandoz, too, was launching a similar drug across 22 cities. Shanghvi wanted to beat Sandoz to the launch and told his team to do whatever it took. “He gave us the green signal to take charge. It was hugely encouraging for us to get that kind of backing,” says Ghosh. The only hitch: the deadline was now crunched by at least three weeks.

“I didn’t go home for at least 3-4 nights,” he recalls animatedly. The task on hand was to launch it in 22 cities and get doctors to speak about it. Due to Sun’s aggression, Sandoz’s events were not well-attended, translating into a lukewarm launch, and the multinational never pursued the product in a significant way after that.

A leader’s vision is often what sets him apart. Rajesh Kikani saw that first-hand in mid-1990 after moving to Sun Pharma from Alembic, where he was executive assistant to the chairman. He was awestruck by Shanghvi’s unusual understanding of pharma. “He was sitting in an office that was barely 2,000 sq ft but had an outsized ambition for the company,” narrates Kikani. Not able to hold himself back, he asked Shanghvi how he proposed to become a market leader. “I was keen on knowing it since I came from a much larger company,” he says.

Shanghvi quietly told Kikani that he saw an opportunity in the chronic segment, while Alembic’s play was on the acute side. “He told me that there was greater loyalty in chronic. Besides, he made it clear that the focus of his organisation was driven by the number of prescriptions,” he says.

Rather than fighting multinationals and going after larger segments such as anti-infectives and gastrointestinals, which needed a larger distribution and sales force, Shanghvi chose to go after chronic therapies such as psychiatry, cardiovascular disease, neurology, oncology and dermatology. Balaji Mosur, who headed the active pharmaceutical ingredient (API) business at Sun Pharma between 1997 and 1999, says margins and profit were of paramount importance to Shanghvi. “He always said a product should give us margin of 60-70%. Else, there was no point being in that business,” says Mosur. 

Srinivas Lanka, former executive director, Sun PharmaIf Shanghvi is well-informed, it is natural that his staff, too, has to keep pace. Anyone who was a little rusty at quarterly review meetings would be reprimanded in a very gentle yet firm manner. “Kya yaar, tum log kuch padhte hi nahin ho,” was Shanghvi’s way of expressing displeasure. In fact, Shanghvi expected others to be just as quick on their feet as him. “It wouldn’t make him happy when people who had to take a decision would say ‘I will get back to you’. He would just say, ‘Kya get back?’ It was mild, but the message was clear,” says Ghosh. For that matter, what would also tick him off was when business heads did not have answers as to why people were leaving. “He expected a manager to have all the details,” says Ghosh.

Overcoming obstacles

People who have worked with him think Shanghvi grasps difficult issues effortlessly. “He has the ability to break down complex issues,” points out Bhagwat Yagnik, former HR head at Sun Pharma. “He has the habit of writing on pieces of paper and going back to them. That is how he builds on an idea,” adds Yagnik, who used to walk past Sun Pharma’s Vadodara office every morning on his way to Alembic, where he worked. An advertisement in a paper for the position of general manager (HR) caught his eye and Yagnik decided to try his luck. “I was more curious to know who the promoter was,” he says. Shanghvi offered to take him on as a manager and promised not to recruit anyone over him if he delivered. As time passed, Shanghvi kept his word and Yagnik worked in the company till 1999.

To Yagnik, Shanghvi presents a combination of an aggressive leader who, if need be, can be extremely sensitive. Yagnik recalls a particularly tense time, when it became clear that his boss was someone who knew no boundaries or hierarchy when it came to fighting a tough situation. 

“In the early ’90s, there was a strike at Sun Pharma’s only plant at Vapi, where temporary workers were demanding to be made permanent. We felt the demand was unreasonable, since it was devoid of either education or merit. I was staying at a hotel there. Dilipbhai left our Vadodara office at 6 am and was in Vapi by 10.30 am. Then, he stayed there till the evening to get to the bottom of things. The strike was called off after a month, when the workers came around to the company’s point of view.”

Around that time, Shanghvi also realised it was a tough time for Yagnik. “I was really busy during that period and camping at Vapi, while my family was in Vadodara. This went on for a while and even on weekends, it was all work for me. In an entirely unpredictable gesture, Dilipbhai organised for my wife and son to come over for the weekend. He said, ‘Go to Daman for the weekend and relax.’ It was a big thing for a young man like me, who was struggling with a complex problem on the site,” says Yagnik.

Unique perspective

Shanghvi believes in building a good organisation instead of focusing on being a great one. “The logic was that in a good organisation, employees will stay on even as it remains low-profile. In a great organisation, the approach is often hostile towards a bad employee,” says Srinivas Lanka, who was with the company from 1995 to 1998 as executive director, adding, “Dilipbhai likes the idea of loyalty from his people. He believes people who stay will give the company a larger market share. His management philosophy is focused on employee stability.” 

Sundaresh Raju, former head, training, Sun PharmaLanka says Shanghvi altered his approach depending on who he was dealing with. “Hands-off or hands-on was completely dependent on the person. In that sense, he was a situation-oriented leader,” he explains. “Once I joined, he never discussed budgets, profits or the business plan with me. No questions were ever asked and he left it to me to run the business,” says Lanka.

Shanghvi clearly saw merit in Lanka’s way of working, because even after he moved on from Sun Pharma, Shanghvi kept things running the way Lanka had left them. “I had set up divisions such as strategic planning, training and market research. Even after I left, that system has been maintained. He hasn’t lost anybody that I trained. Dilipbhai knows how to amalgamate and continue an existing system,” Lanka explains.

Not one for long congratulatory mails or saying ‘good job’, Shanghvi’s appreciation is more in action. The highest appreciation would be getting invited to have lunch with him. And, by that yardstick, Lanka must have done an outstanding job because he did not carry lunch to work even once. With a wide grin, he says the food came from Shanghvi’s home.

As long as the two men were in town, this lunch hour was sacrosanct, where they would talk about pretty much anything except Sun Pharma. This lunch session, which used to go on for 45 minutes, was in a 10x10 meeting room, which was not used by anyone else. The food would come in a multi-layered stainless steel lunch box and would reach office from home around 12.30 pm. “The food was piping hot,” says Lanka. The fare would be rotis, dal, rice and two-three curries, which included baingan, of course.

Culturally, there was a disparity between the sweetness of the Gujarati cuisine and Lanka’s favourite fiery Andhra food. It’s not as if that was not taken care of. “Since I was a south Indian, Vibhabhabhi (Shanghvi’s wife) would add a little spice to suit my taste buds. It was a lot of very tasty baingan,” says Lanka, wistfully. Lanka, who had spent time working for Novartis and Alkem, would describe how those organisations thought and functioned. It caught Shanghvi’s fancy and he would listen a great deal. “A chat could be on how they approached their M&A strategy or just what their line of thinking on market research was,” says Lanka. 

Optimistic opportunist

Shanghvi is always on the lookout for what Sun Pharma can learn from competition. Lanka remembers a casual conversation with his former boss over lunch, when the issue of Combiflam, then a Hoechst Marion Roussel product, came up. “I told him the brand had made a lot of progress since it had good packaging. Combiflam had its brand name printed in English and Hindi, which was a smart thing to do,” he says. It got the patient to remember the name, increasing brand loyalty and avoiding substitution. 

Shanghvi casually asked him if any of Sun Pharma’s brands could have that advantage. At about 4 pm the same day, Shanghvi asked Lanka to come over to his room. “I then saw his table filled with Sun Pharma brands. Dilipbhai was sitting with the head of packaging and asked me to quickly decide on the brands,” he remembers. Soon, around 50 products in Sun’s portfolio across segments such as cardiovascular, anti-diabetes and tranquilisers had the new packaging.

At the same time, when someone did not deliver, Shanghvi didn’t just ignore it. “He would be disappointed. If it continued, he would tell HR and the information was conveyed to that person. He would attend monthly reviews, too, but only as an observer.” Shanghvi was very clear that as the organisation grew rapidly, insiders would be given the first opportunity, but if people inside didn’t match up to what was required, he would look outside. Given that the organisation was growing at breakneck speed, people could not always keep up with the pace.

Bhagwat Yagnik, former head, HR, Sun Pharma“He was a very good judge of people’s capabilities. He would always encourage his team to take on additional responsibilities and grow with the company. But people are limited by their capabilities. He would be sensitive to that and ensure that they are given roles that play to their strengths,” says Raju. So, to people who have worked with him, Shanghvi remains a boss for whom there is, first, a lot of warmth, followed by respect. 

Lanka thinks that while Shanghvi may be a businessman first, he displays the attributes of a monk as well. This was obvious when he would say, “I have come here with nothing.” According to Lanka, this was very helpful when it came to handling a difficult situation. “He would be very composed and it would be conversation as usual,” he says.

This is something echoed by everyone who has worked with the pharma tycoon. Ghosh has this interesting story on how Shanghvi dealt with a not-so-easy situation of the $454 million buyout of Taro in mid-2007. At that point, Ghosh was heading Sun Pharma’s operations in Bangladesh. During one of his visits to India, which always involved a long meeting with Shanghvi, he casually asked his boss what was going on with the Taro deal. “‘Ho jayega’ was all he said, before moving on to other issues. I remember him being remarkably calm,” says Ghosh, who had two stints at Sun Pharma spread over 17 years.

For Shanghvi, his status has never come in the way of how he deals with people. That probably explains his simplicity: anything from a meal at a south Indian restaurant in central Mumbai or just a drive with his family. Anything ostentatious is unlikely to catch his fancy. When Sun Pharma was headquartered in Vadodara, Shanghvi thought it was a good idea for Ghosh to buy an apartment in the city. “This was when he himself was staying at rented accommodation,” says Ghosh.

It was a time when Shanghvi was driving a Maruti 1000 when he could clearly afford better. When Ghosh asked his boss to buy a Mercedes, Shanghvi said, “A car is meant to serve the basic purpose of mobility; this car is good enough,” In his relationships, his passion for pharmaceuticals or just using money astutely, nothing has changed. “Be it the boss or the individual, Dilipbhai has remained the same. Maybe he has become a lot busier,” signs off Raju. That is a fair appraisal of his boss.

Here's your chance to read the latest issue of Outlook Business for free! Download the Outlook ​Magazines app now. Available on Play Store and App Store
On Stands Now