Ranbaxy is a well known name in pharmaceutical company in India, with large amount of shares both in Bombay and National stock exchange has now sold major amount of shares to the Japanese company Daiichi
Daiichi Sankyo bought out the entire promoter stake of 35 per cent in Ranbaxy Laboratories at Rs 737 per share costing $3.4 billion to $4.6 billion
Daiichi Sankyo will hold a majority stake in Ranbaxy,however Ranbaxy will continue to operate as an independent & autonomous Company.
The investing company shall then be amongst the largest generic manufacturers globally in terms of market share.
The sale would create a new powerhouse spanning the entire pharmaceutical spectrum
Part of the problem, state officials say, is that generic drug companies in Japan are small and doctors do not trust them, by effectively rebranding Ranbaxy generics under the well-known name of Daiichi Sankyo, this may change
Competitiveness by optimizing usage of R&D and manufacturing facilities of both companies
The combination of the two companies will give Ranbaxy access to Daiichi 's expertise in research while the Japanese company will benefit from low-cost production on the sub-continent, amid a deepening profits crisis in Japan’s drugs industry
Big threat to the survival of the domestic generic industry
May just dampen the motivation of other Indian aspirants who want to emulate Ranbaxy's success in global Pharma
The acquisition will help Daiichi Sankyo to jump from number 22 in the global pharmaceutical sector to number 15
Ranbaxy will gain easier access to the much-coveted Japanese market by operating from within the Daiichi Sankyo fold, bypassing a lot of European and U.S. companies that are finding it difficult to enter the Japanese market, where safety and testing requirements are a lot higher
The share price of Ranbaxy rose 3.86% to Rs 526.40 on June 9, two days before the company announced its buyout by Daiichi Sankyo.
The benchmark Sensex plunged 506 points the same day
June 10, a day before the deal was announced, the Ranbaxy scrip surged 6.52% to Rs 560.75 and the Sensex fell 177 points. The stock ended almost flat at Rs 560.80 on June 11
June 11 The reason as to why the Ranbaxy stock had been moving against the general market direction since it became public when the company announced about the sale of a majority stake in it to the Japanese firm Daiichi Sankyo
It was not just Ranbaxy that had a run up , but the companies that are promoted by Ranbaxy’s promoter family also rallied. Zenotech surged 20 per cent, Religare (8.53 per cent), Fortis Financial Services (10 per cent), Fortis Healthcare (18.87 per cent), Krebs Biochemicals (4.92 per cent), Jupiter Biochemicals (13 per cent) and Orchid increased by 13.56 per cent.
The deal is a win-win for both Ranbaxy and Daiichi. Ranbaxy couldn’t have grown much on the basis of first to file. It has actually left out the NCE pipeline which Teva has done. It actually left out the bio-similar plant which they were desperately trying to do through Zenotech. So, Ranbaxy’s opportunities seem to have exhausted.
Daiichi, on the other hand, is a small company with 2-3 big brands like Olmesartin and Avista which is a huge cancer drug. It is one of the best gold standard cancer drugs.
For Daiichi, it was important to have some kind of generic play that Novartis has with Sandoz, which is the second largest generic company in the world. Novartis is a USD 30-35 billion company. Maybe Daiichi at the very start of that graph is trying to do exactly that. They have a great play in Ranbaxy, which has a manufacturing and research base. It will also benefit from the cost-competitive advantage and then grow its business from the two angles.