Singh was a pioneer. He took then-unknown Ranbaxy into Nigeria and into minority partnerships in Thailand and Malaysia, to get the company name known and trusted outside India. “He saw where the future was, and invested very aggressively overseas in the ’80s,” says Ranbaxy vice president Bimal Raizada. “That was very unusual for an Indian company in those days. Why would you risk going abroad when you could make money at home in a completely protected market?”
Today Ranbaxy gets half its income from abroad–a balance that’s likely to shift further in favor of the overseas divisions as the developed world grows older and needs more medical care, and at lower prices. “There’s a tremendous generic opportunity opening up in the developed world,” says the company’s new CEO, D.S. Brar. “Being India-based where salaries are lower gives us a real advantage in the generic sector.” R&D is concentrated in Ranbaxy’s home base of New Delhi. Building-block chemicals are made in India, too. Final manufacturing, though, takes place where most of Ranbaxy’s developed-world patients are–in the United States and Britain.
But these days Ranbaxy does more than copy existing drugs. It also improves them. Earlier this month Ranbaxy sold a process it had developed to the giant German drug company Bayer. One of Bayer’s most successful drugs is an antibiotic called ciprofloxacin, but it had to be taken several times a day. Ranbaxy’s pharmacologists developed a new tablet that’s taken only once a day. This seemingly small improvement was worth $10 million up front, with future installments worth an additional $50 million and a royalty of up to 10 percent on every new pill swallowed.
This is one way a small company (by world standards) can thrive in a world dominated by big players like Bayer, which has annual sales of $30 billion and a research budget of close to $2.5 billion. Improving known drugs, Brar says, is “the natural stepping stone” to drug-discovery research. A brand-new drug, developed from basics to over-the-counter sales, might cost $300 milllion. Ranbaxy doesn’t have that sort of money–yet.
