Sandu Pharmaceuticals: Family Dynamics and Succession

Sandu Pharmaceuticals Ltd. (Sandu Pharmaceuticals) was a publicly listed company operating in the pharmaceuticals and health care sector. It manufactured Ayurvedic medicines. Incorporated in 1985, the company traced its history back over more than a century. The third generation was at the helm of the firm in September 2016. The company’s director, was thinking about how previous successive generations in the family had handled the challenge of absorbing family members into the business, and in particular about whether he was doing enough to prepare the next generation to take over a business that was bound to grow more rapidly in the future, given the growing concern worldwide about the cost of allopathic health care and demand for less invasive and more holistic treatments.

The case can be used in a session devoted to succession planning in a family business course, both in graduate and undergraduate programs. It can also be used to understand family dynamics in the context of the confusion between ownership rights and an entitlement mindset among some family members. It effectively illustrates that mere legal succession is not of critical importance in a family firm—more important is the acceptance of the new leader by employees as well as family members. The case would be particularly useful in executive programs or management development programs aimed at experienced and active family business members. After completion of this case, students will be able to<ul><li>discuss how each generation of a family business must grapple with the challenges of handing over the reins to the next generation; it is a learning process for both generations;</li><li>consider issues of succession from the first to the second generation, relationships among siblings and cousins, and the distribution of individual power in a family firm;</li><li>understand formal institutions and mechanisms of family governance (e.g., a family constitution); and</li><li>use various frameworks and tools to analyze a family business.</li></ul>

• Family Business, Succession, Three Circle Model, Unwilling successors