In January 2004, turmoil inside the company broke out into the open. Ranbaxy CEO DS Brar announced that he was stepping down, having lost a power struggle with the company’s heir apparent, the founder’s son, Malvinder Singh. Dr Brian Tempest, an Englishman and chemist with tousled greying hair and a rumpled appearance, was promoted to CEO.
His ascent was viewed as keeping the seat warm for Malvinder, who at thirty-two-years old was promoted to president of pharmaceuticals. To many, it seemed like a loss for professional management and a win for a “dynastic family concern run on one or two people’s fancy,” as Swaminathan saw it.
The news did not bode well for the vision, held by [Dinesh] Thakur and his allies, of Ranbaxy as an Indian Pfizer of the twenty-first century.
A bigger shock was yet to come. At a celebration of the Hindu festival of Holi, held outside on the company campus, employees and their families ate from food trucks and listened to live music. Thakur was standing in the crowd when he noticed his boss, Rashmi Barbhaiya, beckoning to him.
Once the two men reached a quiet spot, Barbhaiya said, “I am leaving Ranbaxy.” Thakur was stunned. Barbhaiya had been with the company for less than two years. It was Barbhaiya who had created Thakur’s job and defended his innovations internally. On his assurance, Thakur had left a good-paying job and a settled life in the United States. Now Rashmi was leaving? “What will I do?” Thakur asked.
“You will survive, and I am not leaving just yet,” Barbhaiya said. “I will be around for a few more months and we can talk.” In the ensuing months, his mentor became furiously negative about the company. The older man told Thakur that Ranbaxy wasn’t the type of place where somebody like him should work.
Over dinner at an elegant hotel with a group of American scientists who had come to help with training, Barbhaiya bad-mouthed the company, making those at the table uncomfortable. Thakur felt baffled by his animosity.
Afterward, Thakur took him aside and asked him to explain his fury. Barbhaiya remained elusive but suggested that he knew of enough “shenanigans” that could bring down the company.
Months later, Thakur went to lunch at Barbhaiya’s home. At the table, Thakur broached the topic again.
“Dinesh, I was trying to change the tires on a car running at sixty miles an hour,” his mentor replied. Thakur asked him to elaborate. Barbhaiya brought up the budget projections for 2004. Thakur recalled those quite clearly, as he had compiled the data across departments for each regional portfolio. “Did the math make any sense to you?” Barbhaiya asked.
Thakur thought back to the number of products in development – around 150. As Barbhaiya explained, in the United States it could cost a minimum of $3 million to develop each generic drug. The cost in India could be about half of that, since labour was so much cheaper.
Ranbaxy’s development budget to support that should have been around $225 million, but it was closer to $100 million instead, as Thakur recalled. The company was dramatically shortchanging its own work.
Thakur filed the information away and the conversation moved on. But the whole experience of Barbhaiya’s departure made Thakur uneasy. Without a high-level ally, his own future at Ranbaxy looked grim.
In July 2004, Thakur’s hopes soared when he met his new boss, Dr Rajinder Kumar. Tall and handsome with elegant manners, Kumar had an open and warm disposition, a reputation for integrity, and a thoroughly blue-chip background. He had arrived from London, where he’d served as GlaxoSmithKline’s global head of psychiatry – clinical research and development.
Kumar had completed his medical training in Scotland at the University of Dundee, then specialised in psychiatry at the Royal College of Surgeons. He went on to join SmithKline Beecham and became vice president and director for clinical development and medical affairs in neurosciences. There, he helped to develop Paxil, a blockbuster antidepressant. He was compassionate, oriented towards patients, and rigorous in his approach to good manufacturing practices.
Unlike the glowering Barbhaiya, who stayed in his office with the shades pulled down, Kumar kept his office door open. He frequently strolled around to meet subordinates at the laboratories and other work areas. Thakur liked and respected Kumar immediately, as did most who met him. Both men had been trained in an environment that valued transparency, and Thakur felt an immediate allegiance.
On the evening of August 17, after just six weeks at the company, Kumar sent Thakur an urgent email, asking him to report to his office early the next morning. Always punctual, Thakur arrived so early that he passed gardeners watering impeccable shrubs and cleaners still polishing the lobby’s tile floors. He passed by the large portrait of Parvinder Singh, Ranbaxy’s renowned CEO, as he headed to Kumar’s office.
When Thakur stepped into his new boss’s office that morning, he was surprised at his appearance. Kumar looked underslept and uneasy, his eyes puffy and dark. He had returned the day before from South Africa, where Ranbaxy’s new CEO, Dr Tempest, had dispatched him to meet with government regulators. It was clear from Kumar’s demeanor that the trip had not gone well. The two men strolled into the hall to order tea from white-uniformed waiters.
“We are in big trouble,” Kumar said to Thakur intently as they returned and then motioned for him to be quiet.
In his office, Kumar handed Thakur a report from the World Health Organization (WHO). It summarised the results of an inspection that the WHO had conducted at Vimta Labs Ltd, a company that Ranbaxy had hired to administer clinical tests of its AIDS medicine. The WHO had done the inspection on behalf of the South African government, which was buying Ranbaxy’s antiretroviral (ARV) drugs to treat its AIDS-ravaged population.
The inspection, conducted by a French inspector named Olivier LeBlaye, had uncovered astonishing fraud. Many of the “patients” Vimta had enrolled in the study did not seem to exist. Much of the data purporting to measure the drugs’ dissolution in the patients’ blood appeared to have been fabricated. The graphs from tests on entirely different patients were identical, as though photocopied.
As Thakur read, his jaw dropped. There could be no assurance that the medicine had even been given to actual patients, owing to the lack of documentation. And there was no evidence that Ranbaxy had monitored the work or audited the results, as was required. This level of fraud meant that the drugs—destined for terribly sick AIDS patients—had essentially been untested.
With the company’s credibility on the line, Dr Tempest had sent Kumar to reassure South Africa’s drug regulators that the situation at Vimta was isolated. Once there, however, Kumar went further, assuring the South Africans that he would do a full review of the antiretroviral portfolio and redo patient tests if need be.
Thakur listened intently as Kumar spoke. On the plane back to India, Kumar’s travelling companion, the director of bioequivalence studies for the company’s entire generic portfolio, told him that the problem was not limited to Vimta or to the ARVs.
“What do you mean?” asked Thakur, barely able to grasp Kumar’s point.
The problem went deeper, said Kumar. He told Thakur that he wanted him to put aside all his other responsibilities for the foreseeable future, go through the company’s entire portfolio – every market, every product, every production line – and determine what was real, what was fake, and where Ranbaxy’s liabilities lay. Kumar then asked him to check in by day’s end, as they set this plan in motion.
Thakur left Kumar’s office stunned. Were more of Ranbaxy’s drugs compromised? If so, how could the company have gotten approvals from the FDA, the world’s toughest drug regulator?
As directed, he returned at the end of the day, but Kumar was not in. Thakur waited. Finally, Kumar arrived, looking visibly upset. Without a word, he sat at his desk and worked intently for twenty minutes before finally looking up. “I need a drink,” he said darkly.
Kumar explained that he’d spent the day fighting with the corporate office over what to do with the fraudulently tested ARV drugs. Kumar had insisted that there was only one right course: to withdraw the drugs from the market immediately and conduct the biostudies properly.
Though the corporate office had initially agreed, it drafted a press release stating only that Ranbaxy would look into the problem. Kumar revised the draft to state that the company was pulling the drugs off the market, effective immediately.
But corporate kept returning the initial, vaguely worded press release for his approval. He sent back his revision again. “I am a physician, and I cannot sign off on something knowing full well it will cause harm to patients,” Kumar declared. “I don’t care how much money or face Ranbaxy loses. Either this stuff comes off the market or I am gone.” Thakur did not want to contemplate losing another boss – especially one he liked so much.
Thakur later returned home to find his three-year-old son, Ishan, playing on the front lawn. He suddenly recalled an incident from the previous year when the boy had developed a serious ear infection. The paediatrician prescribed Ranbaxy’s version of Amoxyclav, a powerful antibiotic.
Despite his son’s taking it for three days, the boy’s 102-degree fever persisted. So the paediatrician changed the prescription to the brand-name antibiotic made by GlaxoSmith- Kline. Within a day, Ishan’s fever was gone. Thakur took the boy in his arms, resolving not to give his family any more Ranbaxy medicine until he knew the truth.
Excerpted with permission from Bottle of Lies: Ranbaxy and the Dark Side of Indian Pharma, Katherine Eban, Juggernaut.
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