Thursday, June 12, 2008


Ranbaxy sold by promoters

Ranbaxy Laboratories, which had been one of the leaders in the global acquistions by pharma companies in India (also see Ranbaxy drug-discovery with Merck and Ranbaxy and GSK), has itself been bought by Japanese drugmaker Daiichi Sankyo. The strategic deal, as it has been called by now former Ranbaxy promoter Malvinder Singh, came as a surprise in the pharmaceutical industry because Ranbaxy had recently announced a record $1 billion in sales. By this deal Malvinder and his brother Shivinder sold their promoter stake of 35% to Daiichi Sankyo for $4.6 billion.

Malvinder brushed off criticism by saying, "I have always believed that the interests of the company are bigger than that of the promoters."

He also said that though Ranbaxy is now a subsidiary of the Japanese company, he will continue as Managing Director, and the Ranbaxy brand will have a separate indentity. Ranbaxy will also fight its patent battles against pharma MNCs independently (see Battle for Lipitor).

Hindu Businessline
PT Jyothi Dutta

Even two years ago, when Ranbaxy was in the thick of its overseas acquisitions, its Chief Executive and Managing Director, Mr Malvinder Singh, told media-persons that more acquisitions were on the radar for the Gurgaon-based company and that, this time, they were prowling around for a catch in the domestic market. Ranbaxy’s equity purchase in Zenotech Laboratories Ltd, Krebs Biochemicals & Industries Ltd and Jupiter Bioscience Ltd, further fuelled the frenzy on Ranbaxy’s aggressive intentions for the local market. But the Orchid story came to a tame end with the two companies announcing a strategic alliance.

Ranbaxy’s decision to sell strategic equity to Daiichi, does not just flummox industry observers, but forces them to re-evaluate challenges facing the industry. Mr Singh told the media that the decision, an emotional one for the promoter family, was to help take Ranbaxy to the next level of growth.

Old hands in the industry say that Ranbaxy as a company had shown immense potential and promise. The vision of Ranbaxy founder Bhai Mohan Singh and subsequently his son, the visionary Dr Parvinder Singh, had made Ranbaxy the poster-boy of the Indian drug industry.

Though Mr Malvinder Singh will continue to remain at the helm of Ranbaxy, which will now be a Daiichi subsidiary, some industry observers say that the promoter family may focus more on its financial services company Religare.
Malvinder Singh
Malvinder Singh's interview with Businessworld Magazine:
This deal brings together a generic (Ranbaxy) and innovator (Daiichi) company. On the financial side, the debt goes to zero, Rs 3,000 crore of cash comes in, the market capitalisation goes to $8billion, the net worth goes up. Our objective is to be No. 1 in generics. Together, we are among the top 15 innovator companies. We are bigger than Teva (the Israeli pharmaceuticals company).

I have spoken to Indian and international players, I have explored mergers and acquisitions. Eventually, I saw the right fit with Daiichi and decided to do this. Ranbaxy needs to enter Japan and do things there. We have to create opportunities, and I want to drive it and lead it.

When we were doing the deal, we started by talking alliances, then a joint equity partnership. But they wanted 50.1 per cent, and the only way we could do that was if we sold our stake.

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