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Macr case

Macr case






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    Macr case Macr case Presentation Transcript

    • Ranbaxy DaiichiGroup: 2
    • The Deal
      DAIICHI announced acquisition of Ranbaxy Laboratories by paying $ 4.2 billion for 51% stake
      EV of RANBAXY =$ 8.5 billion as valued by Daiichi
      acquisition with Equity shares 4203.69 lakhsin 2008 with a Face value of Rs. 5 per share
      Deal expected to make combined unit the 15th largest pharmaceutical company
      Purchase Price: Rs. 737( Premium of 31.4% w.r.t 10thjune 08 prices)
    • Ranbaxy & Daiichi
      Ranbaxy was largest pharmacompanies of India
      Its global sales in 2008 was US $ 1,682
      80% revenue from exports. 26% sales from US, 23% UK
      Daiichi Sankyo:Merger of Daiichi & Sankyo
      It has maximum sales in Japan 68% followed by 20% USA and 9% Europe
    • Market Scenario Pharmaceutical products
      Products were “officially approved copies” of original products whose patent had expired
      Market’s expected growth rate was 10.9% for the next five years
      Issue of Intellectual Property rights
      Indian market for pharmaceutical products is 4th in terms of production 15th in consumption
      size of US $ 14 bns in 2007-08 & expected incremental growth of $14 bns from 2005-15
    • Funding the Deal
      50% of the cost of acquisition secured by bank borrowings and 50% through internal accruals
      Position of Daiichi as on end march 2008
    • Advantages to Daiichi
      DAIICHI:22nd to 15th position in the world
      2nd company after Novartis in Innovativeness and generic business
      Increase in generic product portfolio
      access to RANBAXY‟S world class manufacturing facilities in 14 countries and 1100 R & D teams
      Strengthening itself in Japan, getting employees at lower cost
      Japanese market situation: Aging population, increased importance of generic drugs
    • Advantages to Ranbaxy
      RANBAXY would get larger product basket globally
      Gain entry to Japan( Largest pharma market)
      The presence of DAIICHI and its R & D expertise would enable it to advance its branded drugs business.
      Finally, RANBAXY would become a debt free company.
      Leverage upon Daiichi’s innovation & technology
    • Concerns
      Delay in product launch, competitor takes market share( Pfizer)
      Competitor carry the patents in generic drug which are still to expire
      High R&D and regulatory costs( FDA approval: $800 million)
      Cultural Issues and compatibility of products
      Lacking expertise in running global business
      Currency hedges by RANBAXY would cost DAIICHI $ 122 mn. The rupee was getting depreciated against the USD.