[Ip-health] Financial Times: Japan's Daiichi pays $4.6 billion for Ranbaxy

[Thiru Balasubramaniam]

http://www.ft.com/cms/s/0/25a46440-3780-11dd-aabb-0000779fd2ac.html

Japan=92s Daiichi pays $4.6bn for Ranbaxy

By Joe Leahy in Mumbai

Published: June 11 2008 07:33 | Last updated: June 11 2008 09:05

Japan=92s Daiichi Sankyo is to buy Ranbaxy Laboratories, India=92s biggest
generic drugs maker, in a deal worth up to $4.6bn.

The takeover, which follows a string of overseas acquisitions by
Japanese drugmakers, could permanently alter India=92s homegrown generic
pharmaceuticals industry, which is struggling to maintain its rapid
growth amid concern it lacks the research muscle to compete with
global rivals.

=93This is a significant milestone in our mission of becoming a research-
based international pharmaceutical company,=94 said Malvinder Mohan
Singh, chief executive and managing director of Ranbaxy.

Under the deal, Mr Singh=92s family will sell its 34.8 per cent stake in
Ranbaxy but he will remain as chairman and chief executive. Daiichi
will seek to buy additional shares to ensure it ends up with =93the
majority of the voting capital of Ranbaxy=94.

The deal gives Ranbaxy access to Daiichi=92s expertise in branded drugs
and the Japanese company access to its Indian rival=92s low-cost
production facilities.

It follows similar moves by Daiichi=92s Japanese rivals =96 Takeda
Pharmaceutical this year bought US biotechnology company Millennium
Pharmaceuticals for $8.8bn while Eisai said it would buy MGI Pharma of
the US for $3.9bn in December.

The sale by the Singh family of its entire stake in Ranbaxy took
India=92s corporate world by surprise on Wednesday.

Mr Singh and his brother Shivinder Mohan Singh have grown Ranbaxy,
founded by their late father Bhai Mohan Singh, into an international
producer of generic drugs through an aggressive acquisition strategy.

Analysts say the sale is a signal that India=92s copycat drug sector is
reaching its peak as a standalone industry and needs to enlist the
financial firepower and reach of its global rivals if it is to
continue its growth.

Shares in Daiichi Sankyo, known for its high-blood pressure drug
Benicar, were 5 per cent higher on early reports of the deal while
Ranbaxy=92s shares rose 4 per cent.

The deal values Ranbaxy, one of the proudest of India=92s new breed of
companies operating in advanced industries, at Rs737 a share, a 31.4
per cent premium to Tuesday=92s closing share price and 53.5 per cent
premium to the stock=92s average closing price in the previous three
months.

Takashi Shoda, president and chief executive of Daiichi Sankyo, said
the deal would =93complement our strong presence in innovation with a
new, strong presence in the fast-growing business of non-proprietary
pharmaceuticals=94.

Under the deal, Daiichi Sankyo will also launch a tender offer to buy
up to 20 per cent of Ranbaxy from the market as required under Indian
stock market rules.

Daiichi could also buy a preferential share allotment and could
exercise share warrants to be issued on a preferential basis, but did
not disclose details of the size of these issues.

The total transaction is expected to be worth between $3.4bn to $4.6bn.

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Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru@keionline.org


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