How Not to Handle CEO Succession: Chief of Accident-Prone Ranbaxy Quits Without Notice
If there's a pharmaceutical company equivalent of JetBlue's Steven Slater, it's Ranbaxy CEO Atul Sobti, who quit yesterday with no notice after a long-simmering dispute with his bosses. Wherever he works next, Sobti said, "it would definitely not be pharma." And while he didn't quite grab a beer and slide out of the building, Sobti and his board offered a set of contradictory explanations for his exit, in a chapter that might best be labelled, "How Not to Handle Senior Management Succession Issues."
Sobti's resignation follows an FDA ban of 30 Ranbaxy drugs from the U.S. due to their lousy quality. The Indian generics giant last made headlines in February when the FDA cited it for black particles and cardboard in its diabetes medicine. It was also selling opium without a license. Sobti said:
... he quit as chief executive officer and managing director because he couldn't agree on the future course for the company with the parent Daiichi Sankyo Co.
"Different individual opinions reach a stage where you have to take a decision," Sobti, whose resignation takes effect Aug. 19, said at a briefing in New Delhi today.He told the Times of India:
I took the decision to quit a few months ago, but decided finally (to go) a week ago. Sometimes it's better to quit when there is no resolution, though it is very disappointing and unfortunate.''The TOI added that Daiichi disagreed with Sobti over the company's "hybrid" business model, in which its original generic drug business is combined with Daiichi's development of new, branded drugs. The Japanese were also unhappy with the company's inability to lift FDA oversight, which is now in its third year.
The Economic Times quoted an anonymous member of the Daiichi-controlled Ranbaxy board as saying:
This is a personal decision and not much should be read into this.To sum up: this is a personal decision of no importance triggered by a major disagreement in corporate strategy that was expected as far back as a few months but revealed without notice. Got that?
Sobti was supposed to serve a three-year term while the Japanese got to grips with their acquisition. If Sobti was conflicted, there was surely time for Daiichi to schedule a replacement and ease Sobti to the side. Instead, both sides look ridiculous: The Japanese for not knowing this was going to happen, and the Indians for, well, business as usual at Ranbaxy.
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