Ranbaxy Daiichi Sankyo Merger

SUBMITTED BY:
Abhishek katiyar
PGDM (sec.B)
PGD10005

Introduction

Indias 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.

History
Started

by Ranbir Singh and Gurbax

Singh in 1937.

In

1998, Ranbaxy entered the United

States market

Japanese

company Daiichi Sankyo gained

majority control in 2008.

Financials
2008-

Global Sales of US $ 1,682 Million

Growth

of 4%.

North

America, the Company's largest

market contributed sales of US $ 449 Million

India

clocking sales of around US $ 300

Million

Market

share in India is 5%

Introduction
Japan

based pharmaceutical company.

Established

in 2005 - merger of Sankyo Co.,

Ltd. and Daiichi Pharmaceutical Co., Ltd.

Head

Office Tokyo

Leading

drugs.

company in the field of cardiovascular

Workforce

- 29,272 people
Capital - 50 billion yen

History
Sankyo

Established
Daiichi

in 1913

Pharmaceutical

Established

in 1918

In

2006
Started operation of DAIICHI SANKYO HEALTHCARE CO.,
LTD.

April

1, 2007- started operations as the newly formed

DAIICHI SANKYO Group

WHAT IS MERGER
Merger is defined as fusion of two or more
existing
companies.

One survives and the others lose their

corporate existence.

The survivor acquires all the assets as well

as liabilities of the merged company or
companies.

WHAT IS ACQUISITION
An acquisition is the purchase of a company
by another one by controlling its share capital.

a)Purchase

of shares in open market.

b)Takeover

offer to the general body of

shareholders.
c)Major

shareholders commanding majority of

voting power

Offerer company decides about the

maximum price.

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

Aim

to be Research based International

Pharmaceutical Company.

34.8%
At

stake worth 10,000 crores ($2.4 billion)

Rs 737 per share

Open

offer of 20% to Shareholders of Ranbaxy

THE DEAL
On

June 11 2008, Daiichi Sankyo

acquired a 34.8% stake in Ranbaxy

valued
In

at $2.4 billion.

November 2008, Daiichi-Sankyo

completed the takeover of the company
from the founding Singh family in a deal
worth $4.6 billion by acquiring a 63.92%
stake in Ranbaxy.

WHY RANBAXY DID IT ?

A

very intelligent deal

Had

held share for 50 years

Selling

of entire stake at 30% premium

WHY DAICHI DID IT ?

Japan

has an ageing population and they needed new

market

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

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
After Merger
Ranbaxy Daiichi 15th Largest
Pharmaceutical Company
Ranbaxy to be among the top five
Generic Drug makers in the world

The New Trend

RANBAXY

Daiichi:

a Generics Maker

an Innovator

Merger termed as the

Ardhnarishwar Model

For Ranbaxy
Significant

milestone in becoming a
research-based international
pharmaceutical company.

Ranbaxy

will gain easier access to the

much-coveted Japanese market by
operating from within the Daiichi Sankyo

The

immediate benefit for Ranbaxy is

that the deal frees up its debt and
imparts more flexibility into its growth
plans.

For Daiichi
Easier

to enter the Indian market.

Bigger goal - in securing a strong
presence in the global market for
generics.
The acquisition will help Daiichi
Sankyo to jump from number 22 in
the global pharmaceutical sector to
number 15.
The main benefit is Ranbaxys lowcost manufacturing infrastructure
and supply chain strengths.

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.
3) Use the Indian talent in good manner at
cheap rate.
4)Capture of rich Indian generic store.

Common influences of merger on both

Daichii and Ranbaxy
Reduced

competition & choice for consumer in

oligopoly market

Conflict

with new management

Difficulty

in cultural integration

Monetory

cost to the company

Impact of it on Daiichi
Daichii

have to face competitor of

Ranbaxy

Price

Daiichi paid for acquisition was

quite high compared to the present
pricing of other Indian generic drug
making companies.

Lots

of government restrictions on Ranbaxy drug

Effect on Indian
Pharmaceutical Industry
Ranbaxy

fell 3% on stock market because

of low acceptance and capital gains

Hence,

proving the deal to be

disadvantage to the industry

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