Ranbaxy Daiichi Sankyo Merger

By :Syndicate Group - 3

Introduction
India·s largest pharmaceutical company. ‡Incorporated in 1961 ‡Atul Sobti is currently Ranbaxy CEO and Managing Director ‡Present Chairman- Dr. Tsutomu Une ‡Exports its products to 125 countries ‡Ground operations in 46 countries ‡Manufacturing facilities in 7 countries. ‡HQ: Gurgaon, Haryana.
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History
Started by Ranbir Singh and Gurbax Singh in 1937. y In 1998, Ranbaxy entered the United States market y Japanese company Daiichi Sankyo gained majority control in 2008.
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the Company's largest market contributed sales of US $ 449 Million y India clocking sales of around US $ 300 Million y Market share in India is 5% y .682 Million y Growth of 4%. y North America.Global Sales of US $ 1.Financials 2008.

y . the FDA issued two Warning Letters to Ranbaxy and an Import Alert for generic drugs produced by two manufacturing plants in India. y September 2008. Ranbaxy's shares hit hard by a patent ruling disallowing production of its own version of Pfizer·s drug Lipitor.Major Setback December 2005.

Product portfolio y y y y y y y y y y Anti-Infectives Cardiovascular Diabetes Dermatological Neuro-Psychiatry Pain management Gastro-Intestinal Nutritional A strong player in the NDDS segment. Biological formulations such as Verorab (Rabies Vaccine) and Vaxigrip (Flu Vaccine). .

Major Alliances / Collaborations Drug Discovery & Clinical Development ² GlaxoSmithKline y (Anti-infective and Respiratory Segments) y Drug Discovery Clinical Development ² Merck y Statin molecule out licensed to PPD. USA y .

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(DSI) European subsidiary.S. Inc. subsidiary. and Daiichi Pharmaceutical Co.2009) Capital .272 people (as of September 30. Ltd. Head Office ² Tokyo Leading company in the field of cardiovascular drugs.50 billion yen U.. Established in 2005 .Introduction y y Japan based pharmaceutical company. Daiichi Sankyo. Daiichi Sankyo Europe GmbH (DSE) y y y y y . Workforce . Ltd.merger of Sankyo Co.29..

LIMITED 2006 ² Started operation of DAIICHI SANKYO HEALTHCARE CO..DAIICHI SANKYO COMPANY. Started operations of DAIICHI SANKYO Inc. 2007. LTD. 2005 .started operations as the newly formed DAIICHI SANKYO Group . Started operations of Daiichi Sankyo Europe GmbH April 1.History y y Sankyo ² Established in 1913 y y y y y y y y Daiichi Pharmaceutical ² Established in 1918 September 28.

infectious diseases. Core Development Areas: Thrombosis. Malignant Neoplasm. immunity and allergies. cancer. and bones/joint diseases. Diabetes.Research and Development y GEMRAD (Global Executive Meeting of Research And Development) . Research focusing on the six areas of cardiovascular diseases. glucose metabolic disorders. and Autoimmune Diseases Franchise areas: Hypertension.top research and development decision-making body. and Hyperlipidemia / Atherosclerosis y y y . Bacterial Infections.

Products y y y y y y y y y Sankyo Benicar (olmesartan medoxomil) Mevalotin (pravastatin) Loxonin (loxoprofen) Olmetec (olmesartan) Captopril Zantac (ranitidine) WelChol (colesevelam HCl) Effient (Prasugrel) .

only sold in Japan) .y y y y y Daiichi Pharmaceutical ² Cravit (levofloxacin) Evoxac (cevimeline) FloxinOtic (ofloxacin) Gracevit® (sitafloxacin.

 One survives and the others lose their corporate existence.WHAT IS MERGER  Merger is defined as fusion of two or more existing companies. .  The survivor acquires all the assets as well as liabilities of the merged company or companies.

Acquisition of share capital through cash. Takeover offer to the general body of shareholders.WHAT IS ACQUISITION/TAKEOVER An acquisition is the purchase of a company by another one by controlling its share capital. Major shareholders commanding majority of voting power . issuance of loan capital.  a) b) c) d) Purchase of shares in open market. or insurance of share capital.  A ¶takeover· is acquisition and both the terms are used interchangeably.

Offeror company decides about the maximum price.  An acquisition may be friendly or hostile Time taken in completion of transaction is less in takeover than in mergers. Acquisition usually refers to a purchase of a smaller firm by a larger one.   .

RANBAXY-DAIICHI SANKYO THE DEAL .

THE DEAL Provide Stronger Platform for Drug Development. Manufacturing & Global Reach y Aim to be Research based International Pharmaceutical Company. y .

8% stake worth 10.4% through Preferential Allotment y Open offer of 20% to Shareholders of Ranbaxy y .000 crores($2.4 billion) y At Rs 737 per share y Daiichi will pick up another 9.THE DEAL 34.

4 billion.8% stake in Ranbaxy y valued at $2. y In November 2008. y .THE DEAL On June 11 2008. Daiichi-Sankyo completed the takeover of the company from the founding Singh family in a deal worth $4. Daiichi Sankyo acquired a 34.6 billion by acquiring a 63.92% stake in Ranbaxy.

Singh plans to Invest his $2.THE DEAL Mr.4 billion in: y Financial Services & Hospitals y Religare y Fortis y .

9% growth forecast Business model was struggling with high litigation costs and devaluation of the rupee against the USD US strategy was looking in the face of more expensive litigation Selling of entire stake at 30% premium y y y .WHY RANBAXY DID IT ? y y y A very ´ intelligentµ deal Had held share for 50 years But the Ranbaxy growth curve had peaked 2006 ² 16% growth 2007 ² 7% growth 2009.

WHY DAICHI DID IT ? y y Japan has an ageing population and they needed new market There is growing recognition in Japan of the importance of generic drugs Japanese health Ministry is encouraging doctors to use generic drugs to reduce the health budget Acquisition of Ranbaxy gives Daiichi a low cost manufacturing base in India Daiichi will have a strong generics operations in India and operations in 60 different countries Daiichi moves from 22nd rank to 15th among world largest pharmaceutical companies y y y y .

EFFECTS ON PHARMA INDUSTRY .

THE EFFECTS ON RANKINGS Before Merger  Ranbaxy 8th largest Generic Drug Maker in the World  Daiichi Sankyo 25th Largest Pharmaceuticle Company in the World y After Merger  Ranbaxy Daiichi 15th Largest Pharmaceutical Company  Ranbaxy to be among the top five Generic Drug makers in the world y .

The New Trend y RANBAXY a Generics Maker y Daiichi: an Innovator y A Merger termed as the ´Ardhnarishwarµ Model .

MARKET PENETRATION Ranbaxy gets a support in the R&D Sector where it lags y Daiichi forays in the Generics sector with India·s largest Generics Manufacturer y Penetration of Ranbaxy in Japanese market made easy and same for Daiichi in India y .

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y Ranbaxy will gain easier access to the much-coveted Japanese market by operating from within the Daiichi Sankyo y The immediate benefit for Ranbaxy is that the deal frees up its debt and imparts more flexibility into its growth plans.For Ranbaxy Significant milestone in becoming a research-based international pharmaceutical company. y .

in securing a strong presence in the global market for generics. y The acquisition will help Daiichi Sankyo to jump from number 22 in the global pharmaceutical sector to number 15. y Bigger goal . y The main benefit is Ranbaxy·s low-cost manufacturing infrastructure and supply chain strengths.For Daiichi Easier to enter the Indian market. y .

particularly in the Japanese market. Benefit from Ranbaxy·s strengths in generics to introduce generic versions of patent expired drugs.y y y Will be able to reduce its reliance on only branded drugs and margin risks in mature markets. Additional NDAs from the US FDA on antihistaminics and anti-diabetics is an added advantage. .

y Cost competitiveness by optimizing usage of R&D and manufacturing facilities of both companies. y Strong growth potential by effectively managing opportunities across the full pharmaceutical life-cycle. y An expanded global reach that enables leading market positions in both mature and emerging markets with proprietary and non-proprietary products. y .For the Joint Venture A complementary business combination that provides sustainable growth by diversification that spans the full spectrum of the pharmaceutical business. especially in India.

. therapeutic focus areas and well distributed risks.y Both companies acquire a broader product base.

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. 4)Capture of rich Indian generic store. 3) Use the Indian talent in good manner at cheap rate.Effect of deal on India as whole 1) Loss of good influencing people from pharma sector 2)Maximum use of available natural resources and not rational use.

Common influences of merger on both Daichii and Ranbaxy  Reduced competition & choice for consumer in oligopoly market  Likelihood of  Conflict with  Difficulty in job cuts new management cultural integration the company  Monetory cost to .

Happenings with Ranbaxy after merger y US regulator plan to stop reviewing any drug made at Paonta Shahib (one of the Ranbaxy Indian plant) Ranbaxy failed to secure the American drug regulator¶s permission to market generic drug in US.(Astellas .Flomax) Ban on import of around 30 generic drug by FDA US Financial loss y y y .

Lots of government restrictions on Ranbaxy drug Daiichi has to appoint industry experts to resolve issues related to the USFDA .Impact of it on Daiichi y y y y y Daichii have to face competitor of Ranbaxy Ranbaxy acquisition puts Daiichi Sankyo in red Price Daiichi paid for acquisition was quite high compared to the present pricing of other Indian generic drug making companies.

The Tokyo-based company now expects a net loss of $3.Impact of it on Daiichi Daiichi Sankyo's Loss Forecast The FDA's latest findings come less than a month after Daiichi Sankyo reported a $3. largely because of the yen's recent strength and the Ranbaxy deal  The currency hedges by Ranbaxy would cost the Japanese drugmaker around $122 million this financial year y .7 billion loss in the October-December quarter and warned that annual earnings would swing to a loss.2 billion this fiscal year through March. instead of the previously predicted $663 million gain.

´Daiichi Sankyo might have been deceived by Ranbaxyµ by analyst Fumiyoshi Sakai. followed by Europe with 9 per cent and other markets 3 per cent. y Expiring of Ranbxy patent cutting down the royalty payment y . which has been attributed to the acquisition of Ranbaxy. SoThe fourthquarter net loss of the Japanese pharma giant amounts to $390.Impact of it on Daiichi y Japan accounts for 68 per cent of Daiichi Sankyo·s sales. with North America being the second largest market contributing 20 per cent.1 million.

Effect on Indian Pharmaceutical Industry Ranbaxy fell 3% on stock market because of low acceptance and capital gains y Hence. proving the deal to be disadvantage to the industry y .

sify.com y www.fdanews.com y www.daiichisankyo.com y .wikipedia.com y www.References www.medindia.com y www.scribd.com y www.com y www.ranbaxy.com y www.india-server.

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