Name: Dilip Shanghvi
Profile: Founder, Sun Pharmaceutical
Rank in the Rich List 5
Net Worth $9.2 bln
The Big Hairy Challenge faced in the Last One Year: Buying out the remaining 33 percent stake in Taro, which was initially rejected by minority shareholders
The Way Forward: Look for assets overseas that add to its revenue as well as global footprint
If you haven’t read the conversation with Harsh Mariwala, chairman and managing director of Marico, and Kishore Biyani, founder and group CEO of Future Group, may I urge you to? Both are as different as chalk and cheese. Which is why, their conversation offers some insights into entrepreneurship that is often times at polar opposites.
But there’s one thing the two of them agree on—that there comes a point in every entrepreneur’s life when they ought to let go. The wise Mariwala has seen it too often: “When you grow to a large size, entrepreneurs aren’t able to give up control, unable to trust others and therefore can’t attract talent.” It is a learning that, Biyani says, “came easily”. Because “the biggest fear I have as an entrepreneur is to stay relevant…”.
It is easy to imagine Dilip Shanghvi, founder of Sun Pharmaceutical, as part of the conversation and concurring with the two gentlemen. In May, he announced to the world that he was ready to relinquish his job as chairman of the board of directors to make way for Israel Makov, former chief executive of Teva Pharmaceuticals. Why would Shanghvi, who built Sun Pharma from ground up into one of the most profitable manufacturers of generic drugs in the world, cede ground? “It’s a bold and visionary decision, which other entrepreneurs like myself applaud from the sidelines,” says Kiran Mazumdar-Shaw, chairman and managing director of Biocon.
What about Makov? Why did he accept the job? One of the most respected corporate citizens in Israel, he is credited with building Teva Pharmaceuticals, several times the size of Sun, and even before he exited as the CEO in 2007, he went public with his intentions: That he had done a pretty good job at Teva and there was nothing left to prove. “After Teva, I don’t have any aspirations to manage anything else. Teva is the zenith of management in Israel,” he had said then.
“How do you woo someone like Makov into a position like this?” asks Madhav Bhatkuly, managing partner at New Horizon Investments. Bhatkuly was one of the earliest investors in Sun and knows Shanghvi from the days when the company’s market capitalisation was $89 million, as compared to the $14 billion it is today. The answer, he says, lies in Shanghvi’s consistently dispassionate decision-making. In this case, he relinquished the job in favour of a professional he thought would be beneficial for Sun in the long run.
Shanghvi’s response is characteristically unemotional. “I look at my role as owner and manager in different compartments. I consciously try evaluating my performance as a manager, independent of my performance as an owner.” He told himself that this year, the company he founded in 1983 will cross $2 billion in revenues. He doesn’t have the expertise to run something as big. So the next step is bringing in people who have the experience so that “we learn and anticipate problems instead of solving it after creating them”.
How easy or hard it was to persuade Makov to come on board is something neither would tell. Makov has known Shanghvi from his days at Teva. They’ve stayed in touch closely since 2007 when Shanghvi took over Israeli firm Taro Pharmaceuticals for $454 million, when Sun’s turnover was just a little over $296 million. That familiarity notwithstanding, Shanghvi started to pursue Makov 18 months ago. “We were comfortable with his approach to business and people,” says Shanghvi.
“I think I’ll learn a lot from Mr Makov because his style is different from mine, even though both of us are focussed on operation, efficiency, and continuity in people; in our businesses we are different,” says Shanghvi. While being much more hands-on, Makov focuses only on a few key strategic issues. It’s this chemistry between the two leaders that industry veterans will keenly watch. “Knowing both of them,” says Sanjiv Kaul, managing director who leads the pharmaceutical and health care sector at ChrysCapital, “it will be interesting to see how they blend aggression with tact and diplomacy.”
Predictably enough, Shanghvi downplays his decision to give up chairmanship even though it’s a first of sorts among owner-CEOs in India. He says he is only taking a page out of the strategy books of the Tatas where many group companies have hired chief executives with international experience. “I personally don’t think what we are doing is dramatically different,” he says.