- The Japanese pharmaceutical company Daiichi Sankyo acquired a majority stake in the Indian company Ranbaxy Laboratories for $3.4-4.6 billion. This creates an integrated pharmaceutical company spanning generics, research, and production across various markets. The combination provides growth opportunities through synergies in R&D, manufacturing, and market reach.

2. • Ranbaxy - access to Daiichi’s expertise in research
• Daiichi - benefit from low-cost production

4. • 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

5. • 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

6. • 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

7. • 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

8. • 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

9. • 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

10. • 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

11. • 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.

12. • 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

13. • 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%.

14. • 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

15. • 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

16. • 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

17. • 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

18. • 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

19. • 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

21. 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.

22. • 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.

23. • 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.