Trade Articles

June 11, 2008 has been registered as the memorable day in the 47 years old history of India's largest pharma company, Ranbaxy Laboratories. The $9.62 billion, No.3 company of the Japan, Daiichi Sankyo has acquired 51% stake in the Ranbaxy Laboratories, India's largest maker of generic drugs. Ranbaxy is recognized in 10 top generic pharmaceutical companies. Post to deal, India's largest laboratories in all cash deal, Ranbaxy would be recognized as the majority acquired by the Daiichi Sankyo Company. The Japanese company is ready to purchase 34.8 per cent stake in Ranbaxy at Rs 737 per share. After deal, the total value of both company would reached to nearly $30 billion. The acquisition is probably will completed by the March 2009.

In conformance to the acquisition the Daiichi Sankyo will get the whole sellers shareholding in Ranbaxy and will afterwards acquire its substantial voting capital at Rs 737 per share and the transaction value is expected to be set between US$3.4 to US$4.6 billion (currency exchange rate is US$1=Rs43). The CEO of Ranbaxy Mr. Malvinder Singh will continue to hold its CEO and Managing Director position and after the deal he will be Chairman of the Board.

The move has been taken with a consent of the board of directors of both companies. Daiichi Sankyo is proposed to acquire the high equity stake in Ranbaxy with combination by

• purchasing of shares held by the sellers.
• preferential equity shares allotting.
• providing an open offer of 20% of Ranbaxy's share to the public as per the Indian rules and regulations.
• exercising some portion or all the share warrants issued on a preferential basis to the Daiichi Sankyo.
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Japanese pharma major Daiichi Sankyo Company's step in acquiring the majority stake in Ranbaxy Laboratories is hoping to pave down for other treaties also. It could open business gates for more treaties between India and Japan, set aside outside the pharmaceutical industry. The 51% acquisition buoyant in Ranbaxy for an estimated amount of 4.6 billion dollars ($2.35 billion) would facilitate the Japanese pharmaceutical market access to the low cost and hi-tech qualitative technology. After this deal, Ranbaxy will be recognized as the subsidiary company of the Daiichi Sankyo.

Come as a surprise package for the Indian corporate world, the acquisition will benefit both parties as it will allow Ranbaxy to excel the Daiichi expertise in its various research activities and on the hand, Japanese company will be profited with the low production cost. The said acquisition will help Daiichi in tapping huge market resources of pharmaceutical sector in 60 nations from its present reach of 21 countries. The Daiichi company will catapult in becoming the 15th biggest drug maker in throughout the world from its present 22 position.

Countries with aging populations, such as Japan, are likely to encourage cheap copies of patented drugs to reduce health care costs. Analysts said the deal could also be a response to growing anxiety within the Japanese government over future health care provision and the lack of any real generic drug industry in Japan, which accounts for just 5 per cent of the market. As per the calculations made by the analysts, the deal between Indian and Japanese pharma companies could also be an outcome of increasing tension within the japan's government over the health care sector future, which holds nearly 5% share in the market.

Ranbaxy till now....
Ranbaxy started its journey in the pharmaceutical world as a distributor and become a multinational company with getting more than 80% of its business from other countries. The company was incepted in 1961 and went to public in year 1973.

India's pharma company Ranbaxy Laboratories Ltd has started their Yemen operations with a collaboration of the local Pharma Ltd. The move has been considered towards strengthening the company's position in the Middle- East. After its Yemen operations, company has reached to the milestone of becoming India's first pharma company of having powerful presence in the Middle- East, with its operations stretched across the 11 nations. The company is planning to lay its focus more on the therapeutic areas, which cover gastro-intestine, anti-infectives, anti-allergic etc. Ranbaxy is the first company to be registered in the Saudi Arabia with centralized GCC registration.

Before this acquisition, Ranbaxy Laboratories was on a high acquisition spree from last 2 years. The deal size from last 2 years has increased to a mark of $1.2 billion. The company was busy in entering into synergies in throughout the world and has heightened its stake in various therapeutic areas, geographies and production.

Ranbaxy Acquisitions

• Homegrown to the belgium, Ranbaxy Belgium N.V. was earlier known as the Ethimed NV. It was involved in production of generic pharmaceuticals through Ranbaxy (Netherlands) B.V. Ranbaxy purchased the company at a transaction of $1.58 million (Rs 69.65 million).
• Entire Mundogen Pharma SA aquistion took place through Laboratorios Ranbaxy S.L., Spain, on a transactional value of Euro 4.57 million (Rs 266.12 million). The aquired company was the generic business of the GlaxoSmithKline (GSK), Spain.
• Ranbaxy group aquired the significant part of the unbranded generic business of Allen S.p.A. The said company was the division of GlaxoSmithKline, Italy. The deal clicked on the amount of Euro 8.14 million (428.75 million).
• Ranbaxy acquired the Be-Tabs Pharmaceuticals (Pty) Limited ("Be-Tabs"), South Africa on 1 December, 2006 with a total amount of 500 Million ZAR (USD 70 Million).
• To ensure a high growth in areas like Biologics and Speciality injectables, Ranbaxy has increased its share of equity from 6.94 per cent to 46.95 per cent in Zenotech Laboratories Ltd., Hyderabad.
• In Jupiter Biosciences Limited, Hyderabad Ranbaxy aquired 14.9 per cent stake with the help of equity warrants. The said movemnet helped the Ranbaxy group to excel the booming opportunities in the growing therapeutic segment of Peptides.
• On a total amount of $26 million, the Ranbaxy group aquired 13 dermatology products of Bristol Myers Squibb (BMS), USA.