Case Study of Ranbaxy for Mergers and

Acquisitions
 The Sixth Largest Deal of India after:

Companies Deal Worth

TATA Steel - Corus $ 12.2 Billion

Vodafone – Hutchison Essar $ 11.1 Billion

RNRL - RPower $ 11.0 Billion

Bharti - Zain $ 10.7 Billion

HINDALCO - Novelis $ 6.0 Billion

 Ranbaxy Laboratories Limited (Ranbaxy),
India's largest pharmaceutical company,
producing a wide range of quality, affordable
generic medicines.

 Ranbaxy today has a presence in 23 of the top

25 pharmaceutical markets of the world.

 The Company has a global footprint in 46

countries, world-class manufacturing facilities
in 7 countries and serves customers in over 125
countries.
 Ranbaxy was started by Ranbir Singh and Gurbax
Singh in 1937 as a distributor for a Japanese company
Shionogi. The name Ranbaxy is a combined word
from the names of its first owners Ranbir and
Gurbax.
 Bhai Mohan Singh bought the company in 1952 from
his cousins Ranbir Singh and Gurbax Singh. After
Bhai Mohan Singh's son Parvinder Singh joined the
company in 1967, the company saw a significant
transformation in its business and scale.
 His sons Malvinder Mohan Singh and Shivinder
Mohan Singh sold the company to the Japanese
company Daiichi Sankyo in June 2008.
 Ranbaxy was incorporated in 1961 and went
public in 1973. For the year 2009, the Company
recorded Global Sales of US $ 1,519 Mn.
 The Company has a balanced mix of revenues from
emerging and developed markets that contribute
54% and 39% respectively.
 In 2009, North America, the Company's largest
market contributed sales of US $ 397 Mn, followed by
Europe garnering US $ 269 Mn and Asia clocking
sales of around US $ 441 Mn.
 Ranbaxy is focused on increasing the momentum
in the generics business in its key markets through
organic and inorganic growth routes.
 Ranbaxy has forayed into high growth potential
segments like Biologics, Oncology and Injectables.
These new growth areas will add significant depth to
the existing product pipeline.
 A first-of-its-kind world class R&D centre was
commissioned in 1994. Today, the Company's four
multi-disciplinary R&D centers at Gurgaon, house
dedicated facilities for generics research and
innovative research.
 Daiichi Sankyo Co. Ltd. is a Japan-based major
pharmaceutical company, which ranked number 22 in
the world in sales. Daiichi Sankyo was established in
2005 through the merger of Sankyo Co. Ltd. and Daiichi
Pharmaceutical Co. Ltd., which were century-old
pharmaceutical companies based in Japan.
 In 2006, Daiichi Sankyo acquired Zepharma, the OTC
drugs unit of Astellas Pharma.
 On June 10, 2008, Daiichi Sankyo agreed to take a
majority (35%) stake in Indian generic drug maker
Ranbaxy, with a deal valued at about $4.6 billion.
Ranbaxy's Malvinder Singh will remain CEO after the
transaction.
 In June 2008, the company expressed intent to acquire U3
Pharma, which would contribute a therapeutic anti-
HER3 antibody to the company's anticancer portfolio.
 Daiichi acquired a controlling stake i.e. 50.1% in
Ranbaxy for $ 4.6 billion.
 Singh family sold entire stake of 34.8% for Rs 10,000
crore ($2.4 bn ) at Rs 737 per Share.
 Japanese company picked up another 9.4% in Ranbaxy
through preferential allotment.
 Daiichi made an open offer to acquire 20% more from
other share holders.
 Japanese company can acquire another 4.9% through
preferential issue of share warrants.
 Ranbaxy to get $1 Billion via preferential allotment.
Funds to be used to retire debt.
 Daiichi Sankyo’s focus was to develop new
drugs to fill the gaps and take advantage
of Both Daiichi Sankyo and Ranbaxy’s
strong areas.
 To overcome current challenges in cost
structure and supply chain.
 To take advantage of Daiichi Sankyo’s
strength in striking lucrative alliance and
to establish other pharmaceutical
companies.
 To develop management framework and
expedite synergies.
 To free up Ranbaxy’s debt and impart
more flexibility in its growth plans.
 To elevate Daiichi’s position from 22 to
5th rank in terms of market capitalization.
 Improved product quality.
 Additional revenues through market
expansion.
 Daiichi’s distinct edge in R&D.
 Expansion of market.
 Cost reduction.
 Synergy in IT & supply chain
management.
 Ranbaxy has introduced some of Daiichi’s
products in India, Romania & in 6 African
countries.
 In another year Ranbaxy will introduce some of
Daiichi’s 20 products in the market.
 Daiichi may use Ranbaxy’s manufacturing facilities
which would bring down Daiichi’s R&D expenses
substantially and Ranbaxy’s 200 scientists will get a
chance to support Daiichi’s research effort. As a
result they may manufacture active pharmaceutical
ingredients and later finished products.
 Ranbaxy’s New Drug Discovery Research (“NDDR”)
has been transferred to Daiichi Sankyo India Pharma
Private Limited as part of the strategy to strengthen
the global Research and Development (R&D)
structure of the Daiichi Sankyo Group.
 By incorporating NDDR into the global Research
function, the Group would benefit from more
efficient global R&D, as also achieve quicker results.
 Valtrex, a GSK product was launched by Ranbaxy.
In U.S. the drug promises to increase the sale
upward of to $ 200 million.
 Ranbaxy has launched a generic version of
Prasugrel in India by the name of Prasita. Prasita is
solely marketed by Ranbaxy in India.
 Olvance ,an antihypertensive originally discovered
by Daiichi Sankyo.
 The next in line is german firm’s Flomax.
 There is a rumor that Japanese promoters want
to delist Ranbaxy to get full control over
Ranbaxy and will not be answerable to external
shareholders for its action.
 By:-
 Darshan Jindal
 Gunjan Kapoor
 Karan Gupta
 Neha Mittal
 Shikha
 Shruti Gupta
 Shubham Sharma