I read an article about India's big acquisition deal. The main players are Ranbaxy Laboratories and Daiichi Sankyo. Ranbaxy is the largest drugmaker in India. Also, Ranbaxy is a pure domestic company. Daiichi Sankyo is a Japanese drug company that has 3rd largest drug market share in Japan. Daiichi Sankyo wants to acquire 50.1% stake in Ranbaxy for nearly $4.6 billion. It's a 31% premium over Ranbaxy's current share price. Through this deal, Daiichi Sankyo can jump to the world No.15 drugmaker. But Ranbaxy is very successful company in India and they had received respects from Indian. Because they are a pure domestic company and Indian was proud of this fact. Additionally, until recently, Ranbaxy has been at the forefront of Indian efforts to expand beyond the country's traditional strength in generic drugs by focusing on research and development for new drugs of its own. For instance, Ranbaxy has formed research alliances with Big Pharma giants like GlaxoSmithKline.
Then Why they sell their stake to the Japanese company? It's just because Daiichi Sankyo suggested the most attractive deal to them. Ranbaxy also is facing challenges as it tries to join the drugmaking big leagues. It has had to contend with ongoing legal battles brought by rivals such as Pfizer, which has challenged Ranbaxy's right to make generic versions of Lipitor since 2005. Also, recently, they failed to develop new drug. In the market, R&D is the core of a company's survival. Accordingly, Ranbaxy struggled with the development and they thought if they will receive good proposal, they will sell the company. Additionally, they have some problem with management. They were the first India company which employed professional manager. But now, they lost their managers: Managing Director A.S. Brar in 2004 and then-CEO Brian Tempest in 2005.
Actually, Ranbaxy had tried to find partners that will buy their stakes. They requested the deal even to their rival, Pfizer. Finally, Daiichi Sankyo suggested very attractive deal, and the deal will be accomplished within a few days.
Then why this Japanese company wants to acquire India company? Because now the Japanese drug market is saturated. Accordingly, Daiichi Sankyo decided to expand their market to the several countries that didn't develop. I think the case is a good model to our drug company. For example, Yuhan, korea's largest drug company, now needs to expand their business to the world. Japanese is an advanced country that Korea, so we can learn many things for our future from Japanese companies.
Author: Nandini Lakshman
Title: Inside India's Shocker Pharma Deal
Date: June 11, 2008, 7:16AM EST
Page: 1
entry # 14 20700067
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