Increase in sales/revenues (e.g. Procter & Gamble takeover of Gillette)
Profitability of target company
Increase market share
Reduction of overcapacity in the industry
Enlarge brand portfolio (e.g. L'Oréal's takeover of Bodyshop)
Increase in economies of scale
Reduced competition and choice for consumers in oligopoly markets (Bad for consumers, although this is good for the companies involved in the takeover)
Likelihood of job cuts
Cultural integration/conflict with new management
Hidden liabilities of target entity
The monetary cost to the company
Integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines
Serving in over 125 countries and has an expanding international portfolio of affiliates, joint ventures and alliances, ground operations in 49 countries and manufacturing operations in 11 countries
Ranbaxy Laboratories Limited is an Indian company incorporated in 196. Ranbaxy went public in 1973
The CEO of the company is Mr. Malvinder Mohan Singh
In 1998, Ranbaxy entered Us the world's largest pharmaceuticals market and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in 2005
September 1999 - Ranbaxy out-licensed its first once-a-day formulation to a multinational company
June 23, 2006 received from the U.S. Food and Drug Administration a 180-day exclusivity period to sell simvastatin (Zocor) in the U.S. as a generic drug at 80 mg strength
Daiichi - Sankyo Company, Ltd was established in 2005 through the merger of two leading Japanese pharmaceutical companies
Discovery of new medicines in the areas of infectious diseases, cancer, bone and joint diseases, and immune disorders
Continuous development of novel drugs that enrich the quality of life for patients around the world
1970s, In Basle a Sankyo office was opened to keep contact with the big Swiss pharma companies
1985, Sankyo Europe was established in Duesseldorf
1988, Daiichi Pharmaceutical Europe
1993, established Daiichi Pharmaceutical UK, Ltd. in London
1990, Acquisition of Luitpold Werke, by Sankyo
1997, company name changed from Luitpold to Sankyo Pharma
2005, Daiichi - Sankyo merger
Takashi Shoda is the president & CEO of the company
Production plants in Pfaffenhofen (Germany) and Altkirch (France)
25 million packs and 1.2 billion tablets were dispatched from Pfaffenhofen to over 50 countries worldwide
Termination and official opening of the extended production plant in Pfaffenhofen this year
Gradual rise in the production volume to more than 40 millions packs and approximately 4 billion tablets per year
Presently, Daiichi - Sankyo is Japans 2nd largest drug maker
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.
All management and people structures across Ranbaxy will continue as they are at present
Mr. Malvinder Singh will be appointed Chairman of the Board of Directors &member of the Senior Global Management of Daiichi Sankyo ,in addition to his existing responsibilities as CEO & MD, Ranbaxy
Ranbaxy has thrived on selling off-patent drugs in the U.S. Much more expensive proposition because of litigation
Growing competition in generics at home and abroad
Though Ranbaxy did well this yr it missed its 2007 target of becoming a $2-billion company
Its sight on generating revenues of $5 billion by 2012, this target too appeared to be difficult.
Ranbaxy’s share price has gone up by just 5%, in comparison, the RIL scrip has gone up by 288.07%, Bharti’s by 252.34% and Infosys by 67%.
The R&D pipeline was not delivering enough products, the generic market was not generating adequate returns
Ranbaxy had three choices,It could have spent lots of money in acquiring a big generic company to grow inorganically, merge with a global player, or sell-out.
The sell-out option was the most profitable, both for the promoters as well as shareholder
Daiichi is a leading, research-based pharmaceutical company and this deal would enable Ranbaxy to explore their shared capabilities in drug development
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
A complementary business combination that provides sustainable growth by diversification that spans the full spectrum of the pharmaceutical business
An expanded global reach that enables leading market positions in both mature and emerging markets with proprietary and non-proprietary products
Strong growth potential by effectively managing opportunities across the full pharmaceutical life-cycle
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.