Ranbaxy Merger with Daiichi

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A Project Report for the partial fulfillment of the PGDF Course at SYMBIOSIS CENTRE OF MANAGEMENT and HUMAN RESOURCE DEVELOPMENT

Submitted by Jayant Agarwal (PGDF-02)

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Table of Contents

Sl no 1 2 2.1 2.2 3 3.1 3.2 4 5 5.1 5.2 6 7 7.1 7.2 7.3 8 8.1 8.2 8.3 8.4 8.5 8.6 8.7 9 9.1 9.2 10 11

Title Introduction Background of Ranbaxy Brief History Market share of Ranbaxy Background of Daiichi Sankyo Brief History Market share of Daiichi Sankyo SPOT Analysis of the Indian Pharma Industry Resaons for the Deal Why Ranbaxy did it Why Daiichi Sankyo did it Disadvantages of the deal The Deal Shareholding Pattern Interpretation of the Shareholding pattern Financing the Deal Effects of the Acquisition Benefits for Ranbaxy Benefits for Daiichi Sankyo Benefits for the combined company Impact on the Stock Market Shortcomings of the Deal Happenings with Ranbaxy Effect of this on Daiichi Sankyo Recent Trend Analysis of Ranbaxy Financials of Ranbaxy Analysis of the Financials Conclusions References

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1. INTRODUCTION
In the world of growing economy and globalization, major companies on both domestic and international markets struggle to achieve the optimum market share possible. Everyday business people from top to lower management work to achieve a common goal – being the best at what you do, and getting there as fast as possible. On June 11, 2009 Ranbaxy Laboratories Limited, India’s leading pharmaceutical company, announced that it would become a subsidiary of the Japanese drug-manufacturing firm Daiichi Sankyo Co. Ltd. Ranbaxy, established in the 1960s by the entrepreneur Bhai Mohan Singh, had expanded aggressively over the years and became a global firm with manufacturing operations in 11 countries and it sells drugs in 125 countries. One of the earliest to have been called an “Indian multinational company” by the media, Ranbaxy represented in good measure the successes and ambitions of the Indian pharmaceutical industry. The acquisition of this company by an overseas investor thus raises some concerns about the nature of the recent growth in corporate India and in the pharmaceutical industry in particular. As part of the agreement between the two companies, Daiichi Sankyo bought the entire promoters’ shareholdings of 34.8 per cent in Ranbaxy Laboratories Limited for a price of $3.4 billion to $4.6 billion. Daiichi Sankyo, which is the third largest pharmaceutical company in Japan, intended eventually to establish majority control over Ranbaxy by raising its stake to over 51 per cent. The deal set the stage for the creation of a new pharmaceutical giant, likely to be the 15th biggest in the world. The Ranbaxy-Daiichi Sankyo deal shows that, internationally, India’s pharmaceutical companies are valued highly. At the same time, this deal was also a commentary on some of the weaknesses of the Indian pharmaceutical industry, especially vis-a-vis the major international drug companies.

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2. BACKGROUND OF RANBAXY
Ranbaxy Laboratories Limited (Ranbaxy), India's largest pharmaceutical company, is an integrated, research based, international pharmaceutical company, producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. 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 incorporated in 1961 and went public in 1973. Ranbaxy's mission is ‘To become a Research-based International Pharmaceutical Company’. The Company is driven by its vision to ‘Achieve significant business in proprietary prescription products by...
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