CEO Shuffle: Daiichi Sankyo Appoints Second New Ranbaxy Leader In Less Than 15 Months

The Indian drug maker will see a changing of the guard, as chief executive Atul Sobti steps down and hands over the reins to Arun Sawhney, presently serving as president of Ranbaxy's global pharmaceutical business.

MUMBAI - In a span of less than 15 months, Ranbaxy - now part of Japanese pharma Daiichi Sankyo - will see a second changing of the guard, as chief executive Atul Sobti steps down and hands over the reins to Arun Sawhney, presently serving as president of Ranbaxy's global pharmaceutical business. Sawhney's promotion to managing director is effective Aug. 20.

Sawhney had worked as president of the bulk actives business at homegrown rival Dr. Reddy's and joined Ranbaxy about two years ago. He figures among the senior members of the Ranbaxy leadership team alongside new drug discovery head Pradeep Bhatnagar, R&D President Sudershan Arora and CFO Omesh Sethi.

Last May, Sobti had assumed the role of Ranbaxy's chief executive after Malvinder Singh, the grandson of the company's founder Bhai Mohan Singh, abruptly sold his stake (Also see "As Ranbaxy Founders Exit, Daiichi Sankyo Assumes Complete Control; New Management Expects To Resolve U.S. FDA Issue" - Scrip, 25 May, 2009.). Sobti had joined Ranbaxy in 2005 as president of India, Middle East, Asia Pacific and the global consumer health care business, having left India's largest two-wheeler maker Hero Honda. He became Ranbaxy COO in January 2007.

[Editor's note: Ranbaxy's Sobti sat down for an exclusive interview with PharmAsia News last year to discuss strategy in the U.S. and Indian markets (Also see ""We Know We Will Emerge Stronger In The U.S.," Says Ranbaxy CEO Atul Sobti: An Interview With PharmAsia News (Part 2 of 2)" - Scrip, 18 Aug, 2009.)).]

It could not be immediately ascertained what led to the exit of Sobti but a statement from Ranbaxy said, "The [Ranbaxy] Board noted its sincere appreciation of Mr. Sobti's efforts during his tenure as CEO and Managing Director as well as for building upon the strong legacy of Ranbaxy as a premier global company." According to informed sources, Sobti's contract with Daiichi Sankyo was for a three-year period ending 2012.

Two industry executives who follow movements at Ranbaxy said Sobti was seen as a stop-gap arrangement until Daiichi Sankyo could steer and complete its operational integration plans with the Indian company.

Within the Indian drug industry, Sobti has been seen as a clean and non-controversial executive who was managing the vexatious quality control issues at Ranbaxy's Paonta Sahib and Dewas manufacturing sites with U.S. FDA (Also see "Corrective Actions "Inadequate," U.S. FDA Warns Ranbaxy; Threatens Seizure And Injunction" - Scrip, 5 Feb, 2010.).

In fact, in his final earnings call as Ranbaxy CEO Aug. 12, Sobti said the company is "clearly moving toward a final resolution" with FDA in roughly three to four months and expects to meet with the agency shortly for "comprehensive discussions on outstanding issues." Closure of the issues will open up the U.S. market again for Ranbaxy, he predicted.

Sobti has also been credited for turning around Ranbaxy's lackadaisical performance as it continued to see a fall in U.S market share.

Growth Picking Up

As in its first quarter, Ranbaxy continued to show signs of strong sales recovery in the second quarter, growing 22 percent as compared to the year-ago quarter to $458 million. But the company's post-tax profit came down to $72 million against $139 million, hit hard by fluctuations in the rupee-dollar exchange rates. Strictly on an operational basis, Ranbaxy's second quarter profit was at $100 million against $2 million in Q2 2009.

The Indian drug maker, which is in its 50th year of operations, grew on the back of its first-to-file opportunities in the U.S., such as valacyclovir (GlaxoSmithKline's Valtrex ), while markets like Romania, Russia and India kept the momentum going. Ranbaxy's six-month exclusivity period in the U.S. for valacyclovir ended during the quarter, but peaked at 74 percent of the market share before the product was opened to other generic drug makers.

However, the company has also seen recent difficulties, including the ongoing FDA manufacturing issues and a lost opportunity to launch a first generic of Astellas' prostate enlargement drug Flomax (tamsulosin) - a setback that surprised industry analysts (Also see "Ranbaxy Loses Tamsulosin Launch Opportunity To Impax; Analysts Raise Doubts About Nexium, Lipitor" - Scrip, 3 Mar, 2010.).

- Vikas Dandekar ([email protected])

[Editor's note: This article appears courtesy of PharmAsiaNews.com, Elsevier Business Intelligence's source for Asian biotech and pharmaceutical news. Register for a 30-day risk free trial.]