In a transaction expected to be worth $3.4 billion to $4.6 billion, Daiichi-Sankyo will buy the 34.8% stake in Ranbaxy held by the family of Malvinder Mohan Singh, chief executive and managing director of Ranbaxy. The Japanese company will also launch a tender offer to buy up to 20% of Ranbaxy from the market.
Singh described the deal in a press release as “a significant milestone in our mission of becoming a research based international pharmaceutical company”.
But Dilip Shah, secretary-general of the Indian Pharmaceutical Alliance, which represents a group of Indian generic manufacturers – including Ranbaxy – described the deal as “a sellout not a merger”.
This is the first takeover of an Indian generic drug maker by a foreign manufacturer and could lead to a series of similar deals. “Bankers will check if every Indian pharmaceutical company is sellable,” said Shah.
The deal could also lead to a period of consolidation in the industry, according to Shah, as Indian generic companies merge with rivals to avoid a foreign takeover.
Although known primarily as a maker of generic drugs and for its global challenge to Pfizer’s patent for Lipitor, Ranbaxy has started to increase its focus on developing new drugs.
The company has an agreement with UK-based multinational GlaxoSmithKline to bring two candidate molecules through the early stages of development. The company had also announced plans to spin-off part of its R&D business, which has been named Ranbaxy Life Science Research Limited.
On the day the deal was announced a spokesman for Ranbaxy stressed that all existing deals with other companies would be honoured.
According to a report by Evalueserve called Patenting Landscape in India Ranbaxy was the second largest filer of patents in India between January 2005 and December 2007, behind the government owned Council of Scientific and Industrial Research. The company had 320 published Indian patent applications during this time and 458 PCT published invention applications, almost four times as many as its nearest domestic rival, Dr Reddy’s Laboratories.
The News Focus in the May edition of Managing IP looks at the patent litigation battles in India and contains a profile of Ranbaxy.
