The past decade has gone well for Sun Pharmaceutical founder Dilip Shanghvi. Back in 2005 his fortune stood at $1.5 billion--a huge sum, but well short of the big hitters in India and beyond. Now, Shanghvi has swelled his fortune to $9.2 billion, making him the fifth Indian on the Forbes rich list. The $2.5 billion Shanghvi added to his wealth in the past 12 months made him, for the second year in succession, the biggest gainer among India's pharma elite.
Shanghvi's success is largely tied to his stewardship of Sun, which, since he founded it in 1982, has become a leading light among Indian drugmakers. Sun has attracted more headlines for its protracted, but ultimately unsuccessful, pursuit of Taro Pharmaceutical than anything else. But away from the Taro furor, Shanghvi has built a notable business. Sun has a bigger market cap than its local rivals and is highly profitable. Over the past 5 fiscal years, net profits at Sun have shot up by a compound annual growth rate of 27%.
With the Taro saga now, seemingly, finished, it is unclear how Shanghvi will try to maintain such growth. There is talk of Sun acquisitions in Brazil, Mexico or Russia--even murmurings of a $3 billion deal. Shanghvi threw gas on the gossip flames last year when he made the latest in a string of characteristically contrarian decisions. With Sun flying high, Shanghvi stepped down as chairman to hire a non-Indian, former Teva ($TEVA) CEO Israel Makov. Makov is known for growing Teva through acquisitions.
The move is something of a coup, but is highly unusual for an Indian company. Shanghvi, who is continuing as managing director, has been confounding others with left-field moves for decades. In the 1980s, when everyone else sold antibiotics to doctors, he began selling chronic pain meds to specialists. The bet paid off, and Shanghvi has continued to go against conventional wisdom.
"Eight out of ten times, Dilipbhai has a contrarian idea which has also turned out correct," Tarun Shah, partner at Mehta Partners, told Forbes. Through such contrarian ideas Shanghvi has maintained the growth of Sun in a period littered with difficulties. After two years butting up against hedge funds, Sun dropped its bid for the remaining third of Taro in February. And Sun has also contended with regulatory problems at its other driver of U.S. growth, Caraco. Despite these problems, Sun has added business in the U.S. When the FDA needed a drugmaker to help with the Doxil shortage, Sun stepped forward with its Lipodox generic.
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- Nick Paul Taylor