RATIONALE BEHIND RANBAXY DAIICHI-SANKYO DEAL

Company profile of Ranbaxy:

Established in 1937 by Ranjit Singh and Gurbax Singh Indias largest pharmaceutical company Ranked among worlds top 10 generic company It has a presence in 23 of worlds top 25 pharmaceutical market with export in over 125 countries

Strengths of Ranbaxy:
Cost effective technology Drug delivery system management Production of generic drugs Pharmaceutical ingredients ( apis) future growth drivers

Company profile of Daiichi sankyo:

Established in Sept. 28th 2005.(JAPAN) CEO :TAKASHI SHODA Workforce : 16,237 People. Major Industry : Ethical Drug Manufactures. Annual Sales in FY07: US$ 8.7 Bn

Strengths of Daiichi sankyo :

Japans second largest drug maker company Ranked 22nd drug maker in the world Providing a stable supply of top-quality pharmaceutical products

Rationale of the deal:

From Daiichi sankyo perspective:
Achieving mid-term management plan.

Broader product base and well distributed risks.

Ranbaxys addition can boost Daiichi Sankyos position from #22 to #15 by market capitalization in the global pharmaceutical market. Daiichi Sankyo expects that its return on equity will increase from 6% to 10% in fiscal 2010 as a result of the merger. The most important benefit for Daiichi Sankyo will be the access that it will gain to Ranbaxys presence in 21 emerging markets, out of the total of 40 locations where it is operating. Daiichi Sankyo seeks to exploit Ranbaxys entire value chain

Rationale of the deal (contd.):

Ranbaxy envisages a broader product portfolio for itself as a result of the merger. The company will be free of existing debt as Daiichi Sankyo will be pooling financial resources towards re-financing its entire debt. Subsequently, Ranbaxy expects to have approximately $700 million (INR3000 crores, exchange rate: 1USD=42.8INR) as cash surplus, which increases its book value per share from $1.7 to $4.7. Ranbaxy believes that a stronger balance sheet will allow the company more flexibility to pursue organic as well as inorganic growth opportunities to enhance its branded drugs business and move up the pharmaceutical value chain. As regards markets, the biggest gain for Ranbaxy is its smoother access to the Japanese market, being part of Daiichi Sankyo. Equally important for Ranbaxy is to become the largest player in Japans generic drugs market, for which the company is eyeing organic and inorganic routes.

Rationale of the deal (contd.):

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