Ranbaxy & pursuit of profit; drugs, lies and the ignoble route to riches

Daiichi-Sankyo is reportedly considering suing Malvinder Singh and Shivinder Singh for concealing crucial information while selling their stake in Ranbaxy Laboratories to the Japanese company. It is tempting to ask what sort of due diligence the Japanese company carried out before it shelled out $4.6 billion to acquire a 63.5% stake in Ranbaxy. But that is not the point. What legal remedy is open to other Indian companies, particularly those in the pharma industry, for the severe blow that Ranbaxy Laboratories’ fraudulent behaviour has dealt to their collective credibility and reputation?

Shubh labh has been the traditional motto of India’s business community. It is rich in layered meaning. Labh, profit, is in itself always auspicious, spelling fortune, one would think. Why qualify that with shubh, meaning auspicious, propitious? Clearly, the motto is a call to sustainability of the profit made via goodness in the way it is made. Equally clearly, the charges of deliberate fraud that Ranbaxy agreed to, while accepting a penalty of $500 million in the US, show complete contempt on the part of its past corporate conduct for such tenets of goodness. This is pathetic.

Ethics and business must go hand in hand: ultimately, business exists because it meets, and not pretends to meet, human needs and wants. To take short cuts, in order to make an immediate killing even if it vitiates that job of meeting wants and needs, is to harm the foundation of business. Society will punish those who perpetrate such crimes. Troublingly, such punishment could produce collateral casualties as well. India cannot be a major emerging country, leave alone become an economic power, if it cannot do ethical business. What this entails is not just a call to the innate morality of businessmen but also putting in place systems and processes that enforce ethical conduct. But can this stem from rotten politics? Indian businesses with global ambitions must see their selfinterest in cleaning up India’s politics. You cannot globalise on the back of politics that is funded almost exclusively by the proceeds of corruption.