Friday, January 31, 2014

What is ailing Ranbaxy?

USFDA has repeatedly taken Ranbaxy Laboratories to task for not maintaining specified quality in its manufacturing facilities. The facilities at Paonta Sahib, Dewas, Mohali and recently Toansa in Punjab have failed the test serially. This is very surprising because the US market is important for the company and therefore the management should have taken very strict steps to ensure quality once it came to be known that USFDA was looking askance at it.

So what went wrong? One explanation is that there are disgruntled employees who are deliberately creating quality problems and then informing USFDA. Who could they be? The Boston Consulting Group is advising the company on productivity improvement. One of the obvious recommendations is letting go of some employees. Are the exiting employees creating trouble? If this is possible, BCG must have warned the management in time. If it has not, it means the consultant is also facing quality problems.

Daiichi Sankyo group of Japan bought the company from its original promoters. The Japanese group has accused the promoters of not divulging all relevant information while selling their stake. While the truth in this accusation remains to be tested, is it possible that the employees supporting the original promoters are playing games?

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