The document summarizes the acquisition of Indian pharmaceutical company Ranbaxy by Japanese company Daiichi Sankyo. It describes how Ranbaxy was the largest pharmaceutical company in India but faced growing competition. Daiichi Sankyo was interested in expanding into generics and gaining access to new markets. The $4.9 billion acquisition would benefit both companies by providing access to new markets, manufacturing and R&D capabilities, and strengthening their positions in the global pharmaceutical industry.

1. Market
Scenario
Why How Outcome
By
Akshay Miraje
Prateek Kulshreshtha
Sandeep Kumar
Maulik Shengal

2. • India represents U.S. $6 billion of the $550 billion global
pharmaceutical industry with its share increasing at 10 % a
year.
• Indian sector represents 8% of the global industry total by
volume, putting it in 4th place worldwide, it accounts for 13%
by value, and its drug exports have been growing 30 %
annually.
• The “organized” sector of India's pharmaceutical industry
consists of 250 to 300 companies, which account for 70 % of
products on the market, with the top 10 firms representing 30
percent.
Market Scenario Why How Outcome
Ranbaxy Daiichi-Sankyo
Largest in the India
8th in largest in the global
general pharmaceuticals
 Serving in over 125 Countries
 Ground operations in 49
countries & Manufacturing in 11
countries.
Strong R&D Base.
2nd largest in Japan
22nd Largest in the world
 Operations in 50
countries.
Producer of high quality
drugs

3.  Daiichi-Sankyo acquired 34.8% stake in Ranbaxy on 11th
June, 2008
 Picked up another 9.12% through preferential allotment
 It was an all cash transaction.
 Size of the deal: US$ 4.9 Billion
 As per the deal, total value of Ranbaxy was US $ 8.5 Billion.
Market
Scenario How Why Outcome

4. Market
Scenario How Why Outcome

5. • Strengthen the position of the company.
• Acquisition will provide low cost manufacturing.
• Market access to over 60 countries
• considerable cost savings in their diversification
initiatives
Daiichi-Sankyo - Benefits
• Company will become one of the top 5 in generic
business.
• Access to Daiichi’s advanced R & D facilities.
• Access to Japanese drug market
• Infusion of an additional $ 1 billion into the company.
• Surplus cash of Rs.3,000 crores flows in.
• The market capitalization goes to $8billion & the net
worth goes up.
Ranbaxy - Benefits
Market
Scenario
How Why Outcome

6. • 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 year it missed its 2007 target
of becoming a $2-billion company
• 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.
Market
Scenario
How Why Outcome

7. • The sell-out option was the most profitable, both for the
promoters as well as shareholder
• Daiichi is a leading, research-based pharmaceutical
company
• This deal would enable Ranbaxy to explore their shared
capabilities drug development
• The investing company shall then be amongst the largest
generic manufacturers globally in terms of market share.
• Part of the problem, is that generic drug companies in
Japan are small and doctors do not trust them, by
effectively rebranding Ranbaxy generics under the well-
Market
Scenario
How Why Outcome

8. • A complementary business combination that provides
sustainable growth that spans the full spectrum of
pharmaceutical business
• An expanded global reach that enables leading market
positions in both mature and emerging markets
• Strong growth potential by effectively managing
opportunities
• Competitiveness by optimizing usage of R&D and
manufacturing facilities of both companies
• It will give Ranbaxy access to Daiichi 's expertise in
research while Daiichi will benefit from low-cost
Market
Scenario
How Why Outcome

9. • 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
• The share price of Ranbaxy rose sharply
Market
Scenario
How Why Outcome

10. • http://www.moneycontrol.com/news/business/daiichi-
acquires-525ranbaxy_362194.html
• http://www.frost.com/prod/servlet/market-insight-
top.pag?docid=88873859
• http://www.investopedia.com/university/mergers/mergers
2.asp#axzz1Xwzuwrtw
• http://www.worldpharmanews.com/corporate/1782-
daiichi-sankyo-a-ranbaxy-announce-a-new-social-
contribution-initiative