How a man whose name is not Ambani became the richest Indian

Rich, richer, richest.
Rich, richer, richest.
Image: Reuters/Danish Siddiqui
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This post has been corrected.

In 1983, 27-year-old Dilip Shanghvi borrowed Rs10,000 from his father and came to Mumbai from Kolkata to set up a pharmaceutical business. In 2015, he became India’s richest man.

Shanghvi, founder and managing director of Sun Pharmaceuticals Industries, has a net worth of $21.8 billion (Rs1.35 lakh crore) according to the Bloomberg Billionaires Index. On March 4, he dethroned Mukesh Ambani, the chairman of Reliance Industries, who was till then the richest Indian. Ambani’s net worth is estimated to be $19.8 billion (Rs1.23 lakh crore).

Now 59, Shanghvi’s key to success has been a string of smart acquisitions and a unique management style. Although Sun Pharma has had its own share of problems with US regulators, investors have still loved the company for the man behind it. In February, when he bought a stake in power company Suzlon, the loss-making company’s shares shot up almost 20%.

Shanghvi’s recent acquisition of Ranbaxy Pharmaceuticals has made Sun Pharma India’s largest and the world’s fifth-largest specialty generic pharmaceutical company. And this acquisition has more or less been the primary reason for Shanghvi beating out Ambani. Sun Pharma’s stock has increased 78% over the last one year.

Shanghvi, who is known to be media-shy, did not respond to an interview request for this article.

Early days

Unlike many other pharma top bosses, Shanghvi does not have any formal science education. He completed his bachelors degree in commerce from the Bhawanipur Education Society College in Kolkata. His father was a trader of bulk pharma products.

After coming to Mumbai in 1983, Shanghvi initially focused on a few niche products like psychiatry drugs and capsules. With a two-man marketing team and five products, he started a small manufacturing facility in the industrial town of Vapi in Gujarat—notorious for being one of the world’s most polluted cities.

Four years later, the company started selling across India.

In 1989, after launching a few cardiology products, Shanghvi began to export to neighbouring countries, and has never looked back. In 1991, he set up a research centre for his company. Three years later, Sun Pharma went in for an initial public offering.

Grow, buy, grow 

A large part of Shanghvi’s success can be attributed to his acquisition strategy. His first buyout was in 1996 when he acquired a drug manufacturing plant of Knoll Pharma in Ahmednagar, Maharashtra. The same year the company’s sales operations expanded to 24 countries.

Since then, Sun Pharma has made 19 acquisitions and joint ventures, in India and abroad. The most notable of these acquisitions was a controlling stake in the Israeli drug maker, Taro Pharmaceuticals Industries, in 2010. This acquisition strengthened Sun Pharma’s position in key markets such as the US, Israel and Canada.

In April 2014, Sun Pharma acquired Ranbaxy for $4 billion (Rs25,237 crore). Shanghvi’s acquisitions are always thoughtful. Even when he acquired Ranbaxy, which had a tough time with US regulators, investors did not dismiss it as a foolish buy.

“Given Sun Pharma’s history of turning around acquired assets in the past, the company should be able to succeed with its purchase of Ranbaxy,” said Sarabjit Kour Nangra, an analyst with securities trading and research firm Angel Broking, when the deal was closed.

Manager more than a leader

Shanghvi, who holds a 60.8% stake in Sun Pharma, is more of a manager than a leader.

“His biggest asset is people-management, and he has followed a very simple path,” said Deven Choksey, managing director of KR Choksey Securities, a stock broking firm.

The fact that Shanghvi is not the chairman of Sun Pharma but its managing director corroborates this theory. Israel Makov, a pharma industry veteran, serves as the chairman.

Shanghvi says he believes in letting experts and professionals manage his companies, because as businesses get bigger, the cost of mistakes also increases.

“I have never seen myself as a promoter. I always evaluate myself as a manager,” he said in an 2014 interview. ”When we told Israel to take over as a chairman, I felt that as a manager I needed help. It was never difficult emotionally or from an ego point of view,” he said.


Shanghvi has had his share of problems. In March 2014, the US Food and Drug Administration banned imports from Sun Pharma’s factory in Karkhadi in Gujarat. The regulators said that the factory did not have good manufacturing practices.

In November, Sun Pharma recalled 68,000 bottles of its antidepressant drug from the US after they failed a quality test. This was the second recall in a year. Sun Pharma is also being investigated by the US senate about hiking prices of some generic drugs.

What next?

It is not really hard for Sun Pharma to be number one globally, given its pace of expansion. But Shanghvi differs.

“We are not preoccupied with size. I don’t think becoming number one will give us any pleasure,” he says.

However, he is confident that none of his acquisitions has been a failure. And it seems like Shanghvi wants to replicate this success in other businesses, too.

In February, the Reserve Bank of India said that Shanghvi was one of the 42 applicants for a payment bank. A payments bank will be allowed to accept deposits, provide payments and remittances services and distribute third-party financial products. It cannot lend.

In the same month, Dilip Shanghvi Family and Associates, Shanghvi’s personal investment firm, agreed for a Rs1,800 crore equity investment in Suzlon Energy. Promoted by Tulsi Tanti, Suzlon is the world’s fifth largest wind turbine manufacturer and was looking for a financial investor to sail through a financial crisis.

Meanwhile, Shanghvi’s son Aalok is a senior general manager in Sun Pharma’s international marketing unit. Perhaps Shanghvi is eyeing to build India’s newest family-owned conglomerate.

Correction: The earlier version of the story said Shanghvi’s recent acquisition of Ranbaxy Pharmaceuticals has made Sun Pharma India’s largest and the world’s fifth-largest pharmaceutical company. However, Sun Pharma is the world’s fifth-largest specialty generic pharmaceutical company. Here is a definition of such firms in the New York Times: The Pharmaceuticals Generic & Specialty industry consists of companies engaged in the manufacturing and marketing of over the counter, prescription and veterinary drugs. The Pharmaceuticals Generic & Specialty industry excludes large drug companies with research and development operations, and wholesalers of medical supplies.

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