Wednesday, June 11, 2008

Ranbaxy-Daiichi marriage: Implications for Indian pharma

Japan's second-largest pharma company, Daiichi Sankyo will buy out the entire promoter stake of 35% in Ranbaxy Laboratories at Rs 737 per share. The deal amounts to about USD 2.7-3.7 billion. The Japanese company is eyeing 51% stake in Ranbaxy.

What does this deal mean for both Ranbaxy and Daiichi?
According to D S Brar, who actually steered the company for 20 years and made it into the first billion dollar company from the Indian pharma space, said, “It is probably great news for Ranbaxy shareholders to have this kind of a premium. Many of them will not have expected this kind of a thing.”

Even future upsides are probably factored into this particular deal for Ranbaxy. For Daiichi, it makes sense to have a large research and manufacturing background that Ranbaxy has.

Daiichi makes sense for Ranbaxy because it has got 2-3 big research products to club with the Indian pharma major. It will attack the regulated market with a generic play. Also, its R&D pipeline products will make sense for Daiichi. So, it makes sense for both companies and shareholders.

But what does this marriage mean for Indian pharma companies?
Dr Anji Reddy of Dr Reddy’s Laboratories had a different view. He said, "I can’t imagine selling my company at whatever value. My research pipeline is robust and I believe my company will grow well.”

N Prasasd, who sold his Matrix stake to Mylan Laboratories, said, “Consolidation will be important for the Indian drug industry as a whole to have a global play.”

On whether an open offer might happen:
This is completely taken as a safeguard. We have not been able to get any lead on this. This probably has been cleared by Malvinder Singh and Atul Sobti his Deputy. We have not got any clues from any investment bankers. All of them are equally listening about this entire deal.

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