Industry: Health Care Region: Global Abstract: On June 11th 2008 Japans third largest drug maker Daiichi Sankyo announced, its strategic deal to acquire majority stake in the Indian generic drug major, Ranbaxy Laboratories Limited. Daiichi agreed to pay around US$4.2 billion for acquiring 51% stake (including promoter stake of 34.83%) in Ranbaxy, putting the total enterprise value of Ranbaxy at US$8.5 billion. Daiichi-Ranbaxy deal was the largest acquisition in the Indian pharmaceutical industry and was viewed by analysts as a step towards the consolidation in the world generic drug market. The deal made Daiichi-Ranbaxy, the combined entity the 15th largest pharmaceutical company in the world with a market capitalization of around US$30 billion. It helped Daiichi leverage its innovative drug making capabilities and R&D expertise with Ranbaxys low cost manufacturing abilities to achieve a competitive position in the world generic drug market. Some industry experts claimed that the price Daiichi paid for acquisition was quite high compared to the present pricing of other Indian generic drug making companies. Pedagogical Objectives: An in-depth knowledge about DCF valuation techniques
The rationale behind the acquisition of Ranbaxy by Daiichi
Long-term synergies arising for Ranbaxy after Daiichi acquired it
The advantages and disadvantages of M&A deals
The need for growth through acquisitions in foreign countries
The consolidation trends in the Indian and Global Pharma Industries.
Keywords : Mergers and Acquisitions, DCf Valuation, Pharmaceuticals Industries, Generic Drugs, Synergies, Strategy, Industry value Chain, Daiichi Sankyo, Ranbaxy, Competitive Anaysis, Open Offer, Financial Forecasting Contents : Sankyo Company Limited Daiichi Pharmaceutical Company Financing the Deal and Integration The Spectrum of Activities of Ranbaxy The Road Ahead Ranbaxy Consolidated Income Statement Ranbaxy Consolidated Balance Sheet Overview of World Generic Market Indian Pharmaceutical Industry Market Size and Growth over Last 3 Years Top 25 Pharmaceutical Companies in the World