JANUARY 19, 2006
Gurgaon, India
Five months after Thakur first contacted the FDA, Malvinder Mohan Singh succeeded Brian Tempest as managing director and CEO of Ranbaxy, returning the company to the founding family’s leadership. Malvinder was just thirty-three and knew little about the science of medicine. But his own personality and upbringing, as well as his family’s background, made him seem well suited to a competitive industry with a social mission at its core.
His father, Parvinder, had been austere, restricting everything from candy to conversation. He had indoctrinated his sons into their maternal grandfather’s spiritual organization, Radha Soami Satsang Beas (RSSB), from an early age. Parvinder often took his sons and his wife, Nimmi, to the Beas community, where they volunteered as laborers. Though Parvinder sent his children to elite schools, they had few of the indulgences of their peers. At college, the children of the wealthy drove fancy cars, got extravagant allowances, and ate dinner at five-star hotels. By contrast, Malvinder took public transportation, commuted to college by way of Delhi Transport Corporation buses, got an allowance of less than $10 a month, and ate street food.
Though the Singhs emphasized the ascetic values that had long been central to the family, Malvinder had always been a corporate-titan-in-training, who developed expensive taste and an air of mastery as he grew older. He had been introduced to Ranbaxy’s inner workings while he was a boy. His father would let him browse company reports, hoping he would glean industry trends. During school breaks, Malvinder would tag along with Ranbaxy drug representatives on sales calls to doctors and chemists, riding pillion on the back of their scooters.
He assumed his new role as CEO with ease. His management style was brash, competitive, and ambitious. Malvinder immediately looked around the globe for opportunity. The fawning Indian business press dubbed him “the Pharaoh of Pharma” and hailed him as an “out-of-the-box decision-maker.” Inside Ranbaxy, some viewed him as petulant and immature. He was preoccupied with his own ranking on the Forbes list of India’s 40 richest people. He and his brother Shivinder, with $1.6 billion in assets combined, had fallen from tenth in 2004 to nineteenth in 2005. This year was shaping up to be even worse, which Malvinder seemed to blame on a lack of employee loyalty. When told that a division wasn’t making its numbers, he would yell at employees, “I want profit!” He later explained to a journalist that his passion for Ranbaxy’s collective mission, to become an international research-based pharmaceutical company, drove his conduct, adding, “We too had a sharp focus on topline and bottomline, which is true for any business organization.”
Malvinder and Shivinder both drove $100,000 champagne-colored Mercedes S-class sedans and collected art and photography. They liked fine clothes, and were prized clients of one of Delhi’s most upscale tailors, Vaish at Rivoli, which boasted of serving the “maharajas of business.” Each morning, Malvinder and his brother, who worked in a different part of the family’s businesses, coordinated their outfits, making sure not to wear the same thing to the same meetings. The listeners of radio station Fever 104 FM voted Malvinder among Delhi’s most stylish, and he even sat as the judge of a Miss India competition.
Interacting with employees, Malvinder liked to quote from his favorite book, The Art of War, the 2,500-year-old Chinese military treatise that he viewed as required reading for anyone in business. Perhaps this was not surprising, since the disputes within his own family over real estate and corporate assets resembled warfare.
For years, the extended Singh clan had lived in the heart of New Delhi at one of the world’s most exclusive addresses: Aurangzeb Road, where mansions—or “bungalows,” as the residents call them—sit on acres of planted gardens behind impregnable walls. In 2006, Malvinder’s mother, Nimmi, and his uncle, Analjit, both of whom lived on the multi-acre family property in separate bungalows, filed complaints with the police against each other. Nimmi alleged that she’d caught Analjit erecting an unlawful wall; in response, he’d hired “huge and bulky” men armed with axes and hammers to intimidate her. “I was attacked, threatened, physically abused by goons, who said that not one member of the family of Parvinder Singh, including grandchildren will be alive,” she alleged to the police. Analjit filed his own complaint against Nimmi and Malvinder, alleging criminal intimidation and assault.
The “Ranbaxy Family Feud” hit the Indian press as the next sensational chapter in the almost two-decade saga of claims and counterclaims between family members over Bhai Mohan Singh’s division of his empire and property. In desperation, Nimmi turned to her sons for help. In less than a month, Malvinder and his uncle announced that the family had reached an amicable settlement. Both sides withdrew their lawsuits, of which there were over thirty going back to the 1990s. Malvinder came off as the family diplomat and peacemaker.
He appeared to be a “spiritual young man,” said an Indian journalist who knew the family well. Eight times a year, Malvinder returned to the small town of Beas in Punjab to visit his guru from the RSSB organization, which focused on reuniting man’s soul with God through meditation. His spiritual upbringing, and his family’s core values of austerity, became part of his brand. Reflecting on his childhood in an interview for Duke University’s business school alumni magazine, Malvinder spoke for himself and his brother: “We agree we were born into an illustrious family, however, we were fortunate to have an environment that was simple, pious, and spiritual. . . . Our family values centered on hard work, high ethics, equity of relationships and humility.” Just six weeks after assuming the leadership of Ranbaxy, Malvinder would need to bring all the enlightened values he liked to promote into an increasingly fraught conflict.
On February 20, 2006, two of the FDA’s most experienced investigators, Regina Brown and Robert Horan, arrived at the Paonta Sahib manufacturing plant in the northern state of Himachal Pradesh. Though they had only six days, they were armed with a confidential assignment memo from Edwin Rivera-Martinez’s division: five pages outlining the frauds alleged by Dinesh Thakur.
Despite Ranbaxy’s lead time and preparation, the investigators found troubling lapses. Raw data was routinely discarded. Patient complaints went uninvestigated. But their most important finding was the one that Dr. Mike Gavini had seen and walked right past fourteen months earlier: the unregistered walk-in refrigerator, set to 4 degrees Celsius, and another one like it that had been added since then. The contents of the refrigerators made no sense. Inside were cardboard boxes stuffed with bottles of unlabeled drug samples. “There were no counts for the items, no test status and no reason for storage given for the over 1000 items on the refrigerator inventory and over 150 items on the second refrigerator inventory,” the investigators noted in their report.
What were the refrigerators for? One drug vial inside was labeled 30 degrees Celsius. Was it in the wrong refrigerator by accident, as Ranbaxy would later claim? Or was every sample in the wrong place on purpose? The investigators asked for a log of the fridges’ contents but were told that none was kept. Later, the company claimed that it did maintain a list of the drugs but had not provided it to the FDA “because we did not understand FDA to have requested it.”
The fridges seemed an unlikely hub of fraud. But in trying to explain away unlabeled samples in unregistered refrigerators, the company got tangled up in shifting explanations. Ranbaxy first claimed that the samples were for “regulatory filings globally,” but its refrigeration had no impact on stability tests. In a seeming contradiction, company officials separately claimed that the bottles were “‘test-on-demand control samples’ used only for ‘reference purposes’ but not used for creating any [official] data.” The FDA noted that “it remains unclear to us what these ‘stand-by’ samples are actually used for.” The investigators also took samples of Sotret, Ranbaxy’s generic version of the anti-acne drug Accutane. The FDA found that the drug degraded far in advance of its expiration date and had lower-than-expected potency.
The following week, Brown and Horan set out to inspect Dewas, one of Ranbaxy’s most troubled manufacturing plants. Mike Gavini had last inspected it in December 2004 and found nothing wrong. This time dozens of Ranbaxy officials trailed behind Brown and Horan, scrambling to respond to their questions. The investigators discovered that Ranbaxy had been discarding original electronic data and had changed the policy to retain it only weeks before their arrival. The investigators even found themselves explaining the basics of good manufacturing: that raw data should not be changed “after the fact or outside of the laboratory operation by someone who was not performing the test.”
Horan and Brown had done their jobs. They’d found critical deficiencies that pointed to much larger issues. The findings were serious, and the company’s explanations were too inconsistent to fend off the FDA. In June 2006, the agency issued a warning letter to the Paonta Sahib plant that looked to the world like a severe rebuke. It chronicled a list of failings: not retaining “analytical raw data, undocumented stability sample test intervals, the unclear purpose of ‘standby samples’ [the drugs in the fridge], the inadequate staffing and resources in the stability laboratory,” and the FDA’s lab results for the anti-acne drug Sotret, which revealed that the drug degraded and lost potency. The agency said that it would not consider any new applications for Paonta Sahib’s drugs until the company demonstrated corrections.
This should have been a serious checkmate, since the company had moved manufacturing of its most lucrative and important products for the United States and PEPFAR to Paonta Sahib. But the FDA’s action did nothing to stop all the drugs that were already on the market, drugs from the plant that had already been approved, or drug applications submitted from other sites. Just weeks before the FDA issued the warning letter, Rivera-Martinez sounded almost plaintive when he wrote to Thakur: “We are under a lot of pressure to approve Ranbaxy’s generic version of Pravastatin [a cholesterol-lowering drug] when the patent exclusivity runs out this Thursday.” In short, the bureaucrat’s hands were tied by the agency’s inexorable machinery: to keep approving drug applications almost no matter what.
Thakur had done as much as he could. Despondent that the FDA was still greenlighting Ranbaxy’s drugs, he tried to focus on his family. Sonal had just given birth to their second child, a girl they named Mohavi. She would be their good luck charm, Thakur told his wife. Yet even as Sonal lay in a private hospital in Gurgaon with her arms around her new daughter, both of them receiving excellent care, she worried. Four days in the hospital would cost a major sum. The Thakurs no longer had health insurance and were living from savings. They had gone from being well situated in the corporate world to a fragile, uncertain existence.
Thakur had not been able to find sufficient employment in India. The consulting work, and the income, came in dribs and drabs. Within a few months of Mohavi’s birth, he was finally offered a job with Infosys Technologies that would require him to travel heavily and relocate to the United States, almost full-time. He felt he had no choice but to take it and tried to convince Sonal to come with him, even petitioning her mother, but Sonal resolved to remain in India with the children.
She had always prided herself on her independence. She was neither helpless nor without resources. Yes, she was in an arranged marriage, had two small children, and wasn’t working. But she had been raised by a mother with a master’s degree in Sanskrit, who had insisted that her daughter get a superb education and be able to make her own way in the world. Sonal had done just that. Once she’d gotten her master’s degree in computer engineering and worked as a software engineer at the Carrier Corporation, she enjoyed the most companionable span of her marriage. She and Thakur had worked and provided for Ishan, side by side.
But the day her husband prepared to leave India for the United States felt like the darkest of her life. Though she had chosen to stay in India, she felt alone nonetheless. Her mother and father lived over eight hundred miles to the south, in Raipur. That morning, unable to find Ishan, she went down the basement stairs to Thakur’s office. She found her husband weeping, with his arms wrapped around Ishan, trying to conceal his heartbreak from his wife. She had never seen Thakur cry. Nor had Ishan, who was asking in a puzzled voice, “Why are you crying, Daddy?”
Taking in the scene, Sonal called out, “Don’t! Dinesh, don’t do that in front of Ishan.” Among all her inchoate fears, the one she fixed on was that the boy might somehow be scarred by her husband’s sorrow. Sonal still had no idea what her husband had embarked on with the FDA, yet the stress of it had settled over their marriage like a fog.
There had always been a divide between them. Even under the best of circumstances, Thakur kept a wall around himself. He was not accustomed to having confidants and had revealed his anonymous contact with the FDA to only one person, his friend and former employee Dinesh Kasthuril. Kasthuril, who assumed that Thakur had just tipped off the agency, thought that was “the right thing to do.” He had no idea that his friend was in ongoing dialogue with the FDA. Had he known, he might have expressed his doubt that anyone in India could personally take on a corporation and succeed.
Thakur was doubting the wisdom of what he’d done. He’d put his family at risk, and he feared for their safety. The Singhs had a reputation for threatening people, and he knew too many of their company’s secrets. Thakur expanded the hours of the security guard outside their house to twenty-four hours a day. He told Sonal that he’d done it because he’d be away. Meanwhile, his disappointment only intensified as he waited for definitive action from the FDA, which seemed either helpless to act or uninterested in doing so.
In all of this, there did seem to be one person who understood what Thakur was going through, shared his goals, and believed in the rightness of what he’d done. Her name was Debbie Robertson, and she was an agent in the FDA’s Office of Criminal Investigations. She wrote to Thakur in January 2006 to explain that she would be his new point of contact at the FDA.
Though Edwin Rivera-Martinez’s division continued to examine whether Ranbaxy was complying with regulations, Robertson’s involvement signaled a new dimension to the case. Her job was to investigate whether Ranbaxy had broken any laws or should face any criminal liability.
Robertson was new to the agency, having arrived in October 2005. But she was a seasoned law enforcement professional who had spent ten years as a criminal investigator at the IRS. As she was junior in the agency, she was handed the matter of Ranbaxy to take another look at it, with the implication that the case was a dog. Robertson was not so sure. As soon as she got in dialogue with “M,” as Thakur was known to the FDA, she was struck by his seriousness and evident intelligence, as well as the significant risks he’d taken in contacting the FDA. In turn, her kind and reassuring emails offered Thakur something that no one else at the agency had given him yet: hope.
Nonetheless, Thakur felt disheartened when he returned to the United States. He’d heard initially from former colleagues that the FDA’s inspections in India had been uneventful, which he feared would spell the end of the road for the agency’s inquiry. But Robertson was reassuring on this point too. “It is actually a good thing that [Ranbaxy] thinks the inspection was uneventful,” she wrote to Thakur. “It means they are not suspicious about anything.”
It had been months since Thakur first contacted the agency. He had watched as the FDA announced one new drug approval after another for Ranbaxy. Debbie Robertson tried to ease his frustration. “Imagine, if you will, that we were able to prove even half of what you have told us,” she wrote to Thakur. “This would bring down the entire corporation. One of the largest in the world.” She added, “To lose on a technicality would be a crime in itself.” As she advised him, “Think of the U.S. corporation Enron and how long that took.”
Thakur wrote back, “Do you believe there will be any concrete action against this company ever? . . . It makes me wonder if all my efforts and troubles were worth anything at all.”
She urged him not to lose hope. “The wheels of justice turn slowly,” she wrote, “but they do turn.”