Pharma Tycoon Dilip Shanghvi Has Powered India's Second-Biggest Fortune

On weekends Dilip Shanghvi, 59, likes to drive out to the multiplex near his suburban Mumbai home and catch the latest Hollywood action films–just like any other guy. The hitch: He isn’t any other guy. “It’s getting to be a bit of a bother these days,” acknowledges the soft-spoken, bespectacled founder of Sun Pharmaceutical Industries (market cap: $27 billion) who shuns public attention but can no longer avoid being recognized wherever he goes. A recent excursion with his family was to watch The Expendables 3, which is just his kind of movie, says Shanghvi.

The pharma tycoon’s taste for adventure has lately played out quite dramatically at Sun. With revenues touching $2.6 billion and 25 factories spread across four continents, Sun Pharma is India’s most valuable pharma firm and features among the world’s top five generics makers. Its scorching sales growth of 33% annually in the past decade has been fueled mainly by acquisitions, notably in the U.S., where it’s now the largest Indian generics player.

Back home Shanghvi made a big splash in April 2014 when he inked a $4 billion all-stock deal to acquire listed rival Ranbaxy Laboratories from Japan’s Daiichi Sankyo. In December India’s competition watchdog approved the deal, provided the merged outfit sells off seven drugs, in which it would have a monopoly, within the next six months.

Credit: Vikas Khot / Forbes India

All of this action has propelled Sun’s stock–it’s up 44% in the past year compared to the stock market’s 30% rise over the same period–and lifted Shanghvi to the position of India’s second-richest person, after Reliance Industries’ Mukesh Ambani. With a recent net worth of $17.7 billion Shanghvi edged out steel baron Lakshmi Mittal who slipped for the first time to No. 3 on FORBES ASIA’s October 2014 ranking of India’s richest.

For investors, though, Shanghvi’s real achievement is the handsome 45% Ebitda (earnings before interest, tax, depreciation and amortization) margins that Sun Pharma has been notching up versus the 20% average of rivals. Unsurprisingly, while its peers are valued at between four to six times their revenues, Sun Pharma trades at close to ten times its sales. With its cash hoard of $1.3 billion, Sun is believed to be in the market for more acquisitions.

For now Shanghvi has his work cut out. He acknowledges that Sun Pharma’s heady momentum will force him to forgo more than just a low profile. In a break from the past he must let go and decentralize decision making. Today, he admits, much of his time is spent in creating what he calls “a capable and appropriate structure” for the fast expanding Sun.

Until four years ago the company was run by a close-knit team that included his brother-in-law Sudhir Valia, and like most Indian entrepreneurs who tend to micromanage, Shanghvi called all the shots. “Everyone in the senior team spoke in Gujarati,” recalls Abhay Gandhi, chief executive of the India business, who used to head sales and marketing. He jokes that Shanghvi probably hired him assuming that he was a fellow Gujarati–which he isn’t.

Source Article from http://www.forbes.com/sites/forbesasia/2015/01/08/pharma-tycoon-dilip-shanghvi-has-powered-indias-second-biggest-fortune/
Pharma Tycoon Dilip Shanghvi Has Powered India's Second-Biggest Fortune
http://www.forbes.com/sites/forbesasia/2015/01/08/pharma-tycoon-dilip-shanghvi-has-powered-indias-second-biggest-fortune/
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