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Integration a potential headache for Sun Pharma HR

Sun Pharma has made the orbital shift to become the biggest Indian pharma company: it is now a $ 4.5 billion entity (Rs 27,856 crore), having taken Ranbaxy in its fold.

twitter-logo E Kumar Sharma        Last Updated: May 1, 2015  | 10:23 IST
Integration a Potential Headache for Sun Pharma HR

E Kumar Sharma, Associate Editor
Sun Pharma has made the orbital shift to become the biggest Indian pharma company: it is now a $ 4.5 billion entity (Rs 27,856 crore), having taken Ranbaxy in its fold. The closure of the deal has got all its officials focusing on integration and for good reasons too.

The challenges that Sun faces now are not small.

First, there is the issue of dealing with the US regulators' concerns. Second, they have to ensure the smooth functioning of the growth engine. Here, analysts point out the difference in strategy that will be needed by Sun.

Ranbaxy needs to sell more volumes of drugs to earn the same dollar as Sun (some say as much as four to five times its current sales volume) simply because of the nature of their therapy segments.

While Ranbaxy caters largely to the acute segment (also known as anti-infectives, antibiotics) whereas Sun deals more in specialty and chronic (cardiology, diabetes etc) segments.

One can always argue why the acute segment has to earn the same as the chronic segment business, but then the key point here is that Sun will have to largely chase the volume game with its Ranbaxy portfolio.

But the company's biggest challenge, according to many, is likely to be on the human resource (HR) front.

First, Ranbaxy has been perceived as a company that pays a higher salary compared to others (including Sun). For certain positions, the salaries are 30-50 per cent higher.

This was an issue that confronted Tech Mahindra to an extent when it acquired Satyam.

In Satyam, especially at senior levels, the pay scales were said to be higher. This resulted in many at the senior level either leaving or being allowed to let go.


In the case of Sun, the employee strength has now doubled from around 15,000 to over 30,000, with nearly a third of it being the field force.

Apparently the combined entity will need much more workforce than Sun's 15,000, but how many more is anybody's guess.

Also, much of the correction may happen in areas where there is an overlap between the two companies.

For people who remain within the company, re-alignment of pay scales may not be an easy challenge.

HR experts point to the recent Capgemini acquisition of iGate and feel Capgemini may not have this as a major issue since it is perceived to be a company where salaries are generally higher than iGate.

But then, as HR experts also point out, at the end of the day integration is all about a matching mindset.

Here too, Sun Pharma is seen as a more hands-on and team-led company where as Ranbaxy is perceived as largely individual-led company, with leaders more in focus.

The difference in work cultures at the two companies cannot be taken for granted.

 

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