• Ranbaxy - access to Daiichi’s expertise in

research

• Daiichi - benefit from low-cost production

• Increase in sales/revenues (e.g. Procter &
Gamble takeover of Gillette)
•Profitability of target company
• Increase market share
•Reduction of overcapacity in the industry
• Enlarge brand portfolio (e.g. L'Oréal's takeover
of Bodyshop)
• Increase in economies of scale
• Reduced competition and choice for
consumers in oligopoly markets (Bad for
consumers, although this is good for the
companies involved in the takeover)
• Likelihood of job cuts
• Cultural integration/conflict with new
management
• Hidden liabilities of target entity
• The monetary cost to the company
• Integrated, research based, international
pharmaceutical company producing a wide
range of quality, affordable generic medicines
• Serving in over 125 countries and has an
expanding international portfolio of affiliates,
joint ventures and alliances, ground operations
in 49 countries and manufacturing operations in
11 countries
• Ranbaxy Laboratories Limited is an Indian
company incorporated in 196. Ranbaxy went
• In 1998, Ranbaxy entered Us the world's
largest pharmaceuticals market and now the
biggest market for Ranbaxy, accounting for
28% of Ranbaxy's sales in 2005
• September 1999 - Ranbaxy out-licensed its
first once-a-day formulation to a
multinational company
• June 23, 2006 received from the U.S. Food
and Drug Administration a 180-day
exclusivity period to sell simvastatin (Zocor)
• Daiichi - Sankyo Company, Ltd was
established in 2005 through the merger of
two leading Japanese pharmaceutical
companies
• Discovery of new medicines in the areas
of infectious diseases, cancer, bone and
joint diseases, and immune disorders
• Continuous development of novel drugs
• 1970s, In Basle a Sankyo office was opened to
keep contact with the big Swiss pharma
companies
• 1985, Sankyo Europe was established in
Duesseldorf
• 1988, Daiichi Pharmaceutical Europe
• 1993, established Daiichi Pharmaceutical UK,
Ltd. in London
• 1990, Acquisition of Luitpold Werke, by
• Production plants in Pfaffenhofen (Germany)
and Altkirch (France)
• 25 million packs and 1.2 billion tablets were
dispatched from Pfaffenhofen to over 50
countries worldwide
• Termination and official opening of the
extended production plant in Pfaffenhofen this
year
• Gradual rise in the production volume to more
• Ranbaxy is a well known name
in pharmaceutical company in India, with large
amount of shares both in Bombay and National
stock exchange has now sold major amount of
shares to the Japanese company Daiichi
• Daiichi Sankyo bought out the entire
promoter stake of 35 per cent in Ranbaxy
Laboratories at Rs 737 per share costing $3.4
billion to $4.6 billion
• Daiichi Sankyo will hold a majority stake in
• All management and people structures
across Ranbaxy will continue as they are
at present
• Mr. Malvinder Singh will be appointed
Chairman of the Board of Directors
&member of the Senior Global
Management of Daiichi Sankyo ,in
addition to his existing responsibilities as
CEO & MD, Ranbaxy
• Ranbaxy has thrived on selling off-patent drugs
in the U.S. Much more expensive proposition
because of litigation
• Growing competition in generics at home and
abroad
• Though Ranbaxy did well this yr it missed its
2007 target of becoming a $2-billion company
• Its sight on generating revenues of $5 billion by
2012, this target too appeared to be difficult.
• Ranbaxy’s share price has gone up by just 5%,
• The R&D pipeline was not delivering
enough products, the generic market was
not generating adequate returns
• Ranbaxy had three choices,It could have
spent lots of money in acquiring a big
generic company to grow inorganically,
merge with a global player, or sell-out.
• The sell-out option was the most profitable,
both for the promoters as well as
shareholder
• The investing company shall then be
amongst the largest generic manufacturers
globally in terms of market share.
• The sale would create a new powerhouse
spanning the entire pharmaceutical spectrum
• Part of the problem, state officials say, is
that generic drug companies in Japan are
small and doctors do not trust them, by
effectively rebranding Ranbaxy generics
• A complementary business combination
that provides sustainable growth by
diversification that spans the full spectrum
of the pharmaceutical business
• An expanded global reach that enables
leading market positions in both mature and
emerging markets with proprietary and non-
proprietary products
• Strong growth potential by effectively
• Competitiveness by optimizing usage of
R&D and manufacturing facilities of both
companies
• The combination of the two companies
will give Ranbaxy access to Daiichi 's
expertise in research while the Japanese
company will benefit from low-cost
production on the sub-continent, amid a
deepening profits crisis in Japan’s drugs
• Big threat to the survival of the domestic
generic industry
• May just dampen the motivation of other Indian
aspirants who want to emulate Ranbaxy's success
in global Pharma
• The acquisition will help Daiichi Sankyo to jump
from number 22 in the global pharmaceutical
sector to number 15
• Ranbaxy will gain easier access to the much-
coveted Japanese market by operating from
• The share price of Ranbaxy rose 3.86% to Rs
526.40 on June 9, two days before the company
announced its buyout by Daiichi Sankyo.
• The benchmark Sensex plunged 506 points the
same day
• June 10, a day before the deal was announced,
the Ranbaxy scrip surged 6.52% to Rs 560.75 and
the Sensex fell 177 points. The stock ended
almost flat at Rs 560.80 on June 11
• June 11 The reason as to why the Ranbaxy stock
It was not just Ranbaxy that had a run up , but
the companies that are promoted by Ranbaxy’s
promoter family also rallied. Zenotech surged
20 per cent, Religare (8.53 per cent), Fortis
Financial Services (10 per cent), Fortis
Healthcare (18.87 per cent), Krebs
• The deal is a win-win for both Ranbaxy and
Daiichi. Ranbaxy couldn’t have grown much on
the basis of first to file. It has actually left out
the NCE pipeline which Teva has done. It
actually left out the bio-similar plant which they
were desperately trying to do through
Zenotech. So, Ranbaxy’s opportunities seem to
have exhausted.
• Daiichi, on the other hand, is a small company
with 2-3 big brands like Olmesartin and Avista
• For Daiichi, it was important to have some
kind of generic play that Novartis has with
Sandoz, which is the second largest generic
company in the world. Novartis is a USD 30-
35 billion company. Maybe Daiichi at the
very start of that graph is trying to do
exactly that. They have a great play in
Ranbaxy, which has a manufacturing and
research base. It will also benefit from the