Sunday, June 15, 2008

Surprise! Surprise!- Japanese pharmaceutical Daiichi Sankyo Co. has takenover Indian pharma giant Ranbaxy

At a time when Indian companies are going global by making acquisitions,the largest takeover of a listed Indian company,namely Ranbaxy, by reputed Japanese pharmaceutical Daiichi SankyoCo. comes as a stark contrast and a shock to many. In an unprecedented move Daiichi has offered to take a majority stake(50.1%) in Ranbaxy,with a deal valued at around $4.6 billion.Ranbaxy's Malvider Singh has agreed to remain MD and CEO of the company.

A match made in heaven -

Where Ranbaxy lacks Daichii is strong,where Daichii splutters Ranbaxy excels,hence the deal brings benefits for both corporations.It has created in the eyes of many a true powerhouse-a strategic combination of innovation and generics.

The Japanese market and the world market in general is opening up to the possibilities offered by generics.Ranbaxy is ranked among the ten best generic companies in the world.Since Daiichi is weak on this front,Ranbaxy made a viable option for takeover.Ranbaxy's marketing and Human Resource pool strength was only further incentive to do so.

Post the buyout Daiichi Sankyo will be the second-largest pharma company in India with about 5% market share in the 33,000 crore domestic pharma retail market,just a fraction behind domestic major Cipla.It would also mean that Daiichi which was initially present in only 21 countries can(with the takeover) further it's operations to 56 major nations.

Ranbaxy on the other hand gains from Daiichi Sankyo's excellent product pipeline, technologhy and infrastructure.

What is your take on the deal? Please feel free to share your views on the topic by posting comments here.

4 comments:

  1. Besides the deal, this merger has also had an effect on Zenotech laboratories. Zenotech was locked in the upper limit of 20% at Rs. 112 just after the announcement of Ranbaxy takeover came in.

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  2. Win win situation is good in today's global economy,Malvinder Singh's approach has been very prudent .
    Warm Regards,
    Debashish Bramha.

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  3. • We strongly believe that the Investors should cash out in the current deal, and even if one is a long term investor, he can re-enter into the stock after the open offer closes at lower levels.

    • In fact, the investors should sell the share in the open market at price level of above Rs.600 per share rather than tendering in the open offer. Tendering in open offer attracts long term tax at the rate of 22.4 per cent & short term taxes, in accordance with the income brackets which could be as high as 33 per cent.

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