Succession Planning at Ranbaxy - Family Drama, Corporate Style

            
 
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Case Details:

Case Code : HROB057
Case Length : 18 Pages
Period : 2000-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Ranbaxy
Industry : Pharmaceuticals
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"The question, however, uppermost in most people's mind is: (that) does the decision reflect a tussle between the promoter and professional management in which the promoter eventually had his way."

- An analyst, commenting on the Ranbaxy succession planning issue.1

"The succession plan was driven by Mr Brar (D S Brar, outgoing Managing Director and CEO) himself and he has been close to the family for so long."

- Malvinder Singh, President Pharmaceuticals and the elder son of Ranbaxy founder, the late Parvinder Singh.2

"It is a rather uneventful development in that it is part of a succession plan and the transition will be smooth."

- D S Brar, Outgoing Managing Director and CEO, Ranbaxy Laboratories Ltd.3

An Un-Expected Departure?

In December 2003, S D Brar (Brar), CEO and Managing Director of Ranbaxy Laboratories Ltd., (Ranbaxy)4 announced his decision to resign from his post. Brar was to complete his tenure in July 2004. He named Dr Brian Tempest (President, Pharmaceutical Division, Ranbaxy) as his successor.

Brar's decision to step down generated mixed responses from industry watchers, analysts and the investor community. Some media reports claimed that Brar's exit from the company was a result of the strained relationships between Ranbaxy's professional managers and the promoter family.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

A few analysts said that Brar had no choice but to leave the company as Malvinder Singh and Shivinder Singh (sons of Ranbaxy's founder, the late Parvinder Singh, and owners of more than 32% of stake in the company) wanted to establish their control over the management of the company.

Official sources denied this, stating that a succession plan had already been put in place, and that Brar's resignation was a part of that plan. However, the controversy regarding Brar's departure refused to die out.

Meanwhile, Ranbaxy's stock price fell on speculation about whether Ranbaxy would be able maintain its strong growth without Brar at the helm.

It was under his leadership that the company had evolved from a small Indian pharmaceutical company into a truly global pharmaceutical major.

Succession Planning at Ranbaxy - Family Drama, Corporate Style - Next Page>>


1] 'Ranbaxy Undecided on Succession Plan,' www.tribuneindia.com, December 29, 2003.

2] As quoted in 'No Change in Ranbaxy's Growth Strategy, says Malvinder Singh,' www.blonnet.com, December 27, 2003.

3] As quoted in 'Milestones achieved, so I am leaving, says Ranbaxy's Brar,' www.blonnet.com, December 26, 2003.

4] Ranbaxy Laboratories Ltd, India's largest pharmaceutical company, manufactures and markets branded generic pharmaceuticals and active pharmaceutical ingredients. The company sells its products in over 70 countries where it operates through a number of affiliates, joint ventures and alliances. In early 2004, Ranbaxy had manufacturing operations in seven countries and ground operations in 34 countries.

 

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