The Pharma Phenom

Mukesh Ambani is the poster-boy of India’s ultra-rich. His father, Dhirubhai Ambani, the founder of Reliance Industries, was a self-made entrepreneur, and while Mukesh had a hand in scaling up the company to its present status, it is also true he was born into wealth. He has interests in diverse sectors and lives in a fortress that looms over the rest of India’s financial capital. He was India’s richest man, according to Forbes, for eight consecutive years.

But then Forbes’ real time tracker, which takes into account daily fluctuations of stock prices, recently noted that Ambani’s net worth had slipped from $23.6 billion to $20.4 billion, and that of a less famous billionaire had soared from $18 billion to $21.5 billion. Dilip Shanghvi, founder and managing director of Sun Pharma, is now India’s richest man. On the global rich list, Shanghvi has moved to 37th position while Ambani has slipped to the 43rd spot. At the time of going to print, Shanghvi’s real time net worth was $21.8 billion, while Ambani’s was $19.7 billion. The tech tycoon Azim Premji is India’s third richest man with a real time net worth $19 billion.

Shanghvi is notably different from Ambani. He is a completely self-made entrepreneur. Born to a pharmaceutical wholesaler in Kolkata, Shanghvi finished his education there and, at the age of 27, travelled to Bombay with just Rs 10,000 in his pocket. In 1983, using the experience he had gained in his father’s business, he established Sun Pharma with a two-man marketing team and a small manufacturing facility at Vapi in Gujarat. In those days, multinational pharma companies held sway over the Indian market. With assistance from India’s new patent regime, Shanghvi’s bigger Indian rivals were trying to take on multinational drug makers in established categories. But Shanghvi played a contrarian game.

Instead of focusing on anti-infectives and gastrointestinal therapies, which were traditionally considered the biggest revenue generators in India, and which require big investments in marketing, sales and distribution, Shanghvi focused on drugs for chronic ailments, then said to constitute only 10 per cent of the Indian pharmaceuticals market. His business grew gradually as he built a portfolio of speciality and sustained therapies prescribed for cardiovascular diseases and in the fields of psychiatry, neurology, oncology and dermatology. It was a portfolio with low potential back then. But as lifestyle ailments in India grew, the share of such therapies too rose up sharply. Chronic drug sales are now almost a fourth of the total in India, and Sun Pharma is the largest and most valuable pharmaceutical company in the country. With the acquisition of Ranbaxy last year, Sun Pharma is now set to become the world’s fifth largest generic pharmaceuticals company.

When Shanghvi took his company public in 1994, the IPO is said to have been oversubscribed 55 times.

Over the years, Shanghvi has bought over a string of pharma companies across the world, from Caraco Pharma in 1997, through which he entered the US market, to Israel’s Taro Pharma in 2007 and the Delhi-based Ranbaxy Laboratories last year. Apart from the pharmaceuticals industry, Shanghvi recently also invested in the energy sector by buying a 23 per cent stake in Tulsi Tanti’s Suzlon Energy for almost $300 million. Over the past year, pharma stocks have had a good run on the Indian stock market. According to media reports, Shanghvi’s wealth has risen 65 per cent during this period. The toppling of Ambani from his perch occurred when the stock prices of Sun Pharma and SPARC (Sun Pharma Advanced Research Company) shot up after the company secured a nod for an anti-epileptic drug from the US drug regulator.

Dilip ShanghviForbesMukesh AmbaniRichest IndianSun Pharma