Experts call Ranbaxy sell off as good deal

Mumbai, June 12 : The deal in which Ranbaxy Laboratories Ltd India's largest pharmaceutical company was sold off to a Japanese-based Daiichi Sankyo Co. has been appreciated by experts.

ChrysCapital Managing Director Sanjiv Kaul, an ex-Ranbaxy executive and a sector analyst said, "Commercially, it is an awesome deal. However, Ranbaxy was the all-conquering Indian hero and should have been the last man standing instead of being the first to capitulate. A huge positive for Ranbaxy but a negative for Indian pharma."

Sujay Shetty, head of Life Sciences, PriceWaterhouseCoopers said the deal has discovered the value of Indian companies.

Promoters will find it difficult to get the same kind of valuation at all times and the sector may see more deals, though not immediately. "Daiichi Sankyo is an interesting combination of innovator and generic product basket. At some point of time, the merged entity may itself become a takeover candidate of global pharma majors, " he added.

The deal will bring in new drugs from Daiichi's portfolio into the Indian market, and tempt Indian pharma majors, particularly generic manufacturers hitting a plateau in overseas markets, to sell out and realise attractive valuations of the kind that Ranbaxy has secured.

The deal will also provide Daiichi Sankyo the platform to launch its innovator products in India at competitive prices.

Recently, the Japanese major had tied up with GSK India to sell its hypertension drug, Olmesartan Medoxomil at one-fifth price in India. The deal may expedite the company's plan to bring more of its proprietary products to India and also use the low-cost manufacturing facilities in India.

Daiichi Sankyo will be the second largest pharma company in India with about 5 per cent market share in Rs 33,000 crore domestic pharma retail market, closely following domestic major Cipla.

Promoters Malvinder Mohan Singh and Shivinder Mohan Singh, grandsons of Bhai Mohan Singh, a refugee who bought the company in the aftermath of India's partition, on Wednesday said they were selling their entire stake, 34.82 per cent, in Ranbaxy to Daiichi Sankyo Holdings for 2.4 billion dollars.

The deal, the biggest ever selloff by an Indian business family, marked a full circle for Ranbaxy that started off in 1937 as a distributor for another Japanese company Shionogi.

Bhai Mohan Singh bought the company in 1952 - from his cousins Ranjit Singh and Gurbax Singh, whose names combined to form the Ranbaxy brand and sold it to the Daiichi Sankyo Co on June 11.

ANI