ranbaxy acquisition
TRANSCRIPT
7/31/2019 Ranbaxy Acquisition
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Ranbaxy Acquisition By
Daiichi - Sankyo
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Contents
1.Introduction 1.About the Companies 1.Acquisition 1.Reasons behind Acquisition 1.Advantages and Outcome 1.Effect on Stock Market 2.Conclusion
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Ranbaxy Daiichi - Sankyo Deal
• Daiichi - Sankyo, the Japanese pharmaceuticals company,has acquired 52.5-per cent stake in Ranbaxy • Under the terms of the deal, Ranbaxy will become a
subsidiary of the Japanese company • Ranbaxy - access to Daiichi’s expertise in research • Daiichi - benefit from low-cost production
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Acquisition
• Is the buying of one company (the ‘target’) by another
• May be friendly or hostile • Usually refers to a purchase of a smaller firm by a larger
oneTypesa) Buyer buys the shares b) Buyer buys the assets of the target company
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Advantages of Acquisition
• Increase in sales/revenues
• Profitability of target company• Increase market share• Reduction of overcapacity in the industry• Enlarge brand portfolio (e.g. L'Oréal's takeover of
Bodyshop)
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Disadvantages of Acquisition
• Reduced competition and choice for consumers in
oligopoly markets (Bad for consumers, although this isgood for the companies involved in the takeover)• Likelihood of job cuts • Cultural integration/conflict with new management• Hidden liabilities of target entity • The monetary cost to the company
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About Ranbaxy
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About Ranbaxy
• Integrated, research based, internationalpharmaceutical company producing a wide range ofquality, affordable generic medicines
• Serving in over 125 countries and has an expanding
international portfolio of affiliates, joint ventures andalliances, ground operations in 49 countries andmanufacturing operations in 11 countries
• Ranbaxy Laboratories went public in 1973 • The CEO of the company is Mr. Atul Sobti after Mr.Malvinder Mohan Singh has stepped down in May
2009
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Ranbaxy Success Story
• In 1998, Ranbaxy entered US the world's largestpharmaceuticals market and now the biggest marketfor Ranbaxy, accounting for 28% of Ranbaxy's salesin 2005
• September 1999 - Ranbaxy out-licensed its first once-a-day formulation to a multinational company
• June 23, 2006 received from the U.S. Food and DrugAdministration a 180-day exclusivity period to sellsimvastatin (Zocor) in the U.S. as a generic drug at80 mg strength
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About Daiichi - Sankyo
• Daiichi - Sankyo Company, Ltd was established in2005 through the merger of two leading Japanesepharmaceutical companies
• Discovery of new medicines in the areas of infectiousdiseases, cancer, bone and joint diseases, andimmune disorders
• Continuous development of novel drugs that enrichthe quality of life for patients around the world
• Presently, Daiichi - Sankyo is Japans 2nd largest drug maker
J f D ii hi S k
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Journey of Daiichi - Sankyo
• 1970s, In Basle a Sankyo office was opened tokeep contact with the big Swiss pharma companies • 1985, Sankyo Europe was established in
Duesseldorf • 1988, Daiichi Pharmaceutical Europe
• 1993, established Daiichi Pharmaceutical UK, Ltd.
in London • 1990, Acquisition of Luitpold Werke, by Sankyo • 1997, company name changed from Luitpold toSankyo Pharma • 2005, Daiichi - Sankyo merger • Takashi Shoda is the president & CEO of the
company
R b A i i i
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Ranbaxy Acquisition
R b A i iti
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Ranbaxy Acquisition
• Ranbaxy is a well known name in pharmaceutical
company in India, with large amount of shares bothin Bombay and National stock exchange has nowsold major amount of shares to the Japanesecompany Daiichi
• Daiichi Sankyo bought out the entire promoter stakeof 35 per cent in Ranbaxy Laboratories at Rs 737per share costing $3.4 billion to $4.6 billion
• Daiichi Sankyo will hold a majority stake inRanbaxy, however Ranbaxy will continue to operateas an independent & autonomous Company.
R b A i iti
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Ranbaxy Acquisition
• All management and people structures acrossRanbaxy were continue as they were. • Mr. Malvinder Singh was appointed Chairman of the
Board of Directors &member of the Senior GlobalManagement of Daiichi Sankyo ,in addition to hisexisting responsibilities as CEO & MD, Ranbaxy.
• Currently the CEO of the company is Mr. Atul Sobtifrom May 2009 onwards.
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Ranbaxy Acquisition
R b A i iti
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Ranbaxy Acquisition
Reasons for Takeover
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Reasons for Takeover
Daiichi Sankyo and Ranbaxy believe this transaction
provides the significant long-term value for allstakeholders through: • A complementary business combination
• An expanded global reach
• Strong growth potential
• Cost competitiveness by optimizing usage of R&Dand manufacturing facilities
Reasons for Takeover
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Reasons for Takeover
The R&D pipeline was not delivering enough
products, the generic market was not generatingadequate returns • Ranbaxy had three choices,
o It could have spent lots of money in acquiring a
big generic company to grow inorganically,o merge with a global player o sell-out.
• The sell-out option was the most profitable, both for
the promoters as well as shareholder
• Daiichi is a leading, research-based pharmaceuticalcompany and this deal would enable Ranbaxy toexplore their shared capabilities in drug
development
Financial Highlights:BSE
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Financial Highlights:BSE
425.80
+11.45 (2.76% )
Financials: Charting
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Financials: Charting
Benefit of the Deal
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Benefit of the Deal
• a win-win for Ranbaxy and Daiichi. • Competitiveness by optimizing usage of R&D and
manufacturing facilities of both companies • The combination of the two companies will giveRanbaxy access to Daiichi 's expertise in research
while the Japanese company will benefit from low-cost production on the sub-continent, amid adeepening profits crisis in Japan’s drugs industry.
• Daiichi will Gain position of major player in Generics.
Outcome of the Deal
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Outcome of the Deal
• The acquisition will help Daiichi Sankyo to jump fromnumber 22 in the global pharmaceutical sector tonumber 15.
• Ranbaxy will gain easier access to the much-covetedJapanese market by operating from within the DaiichiSankyo fold, bypassing a lot of European and U.S.companies that are finding it difficult to enter the
Japanese market, where safety and testingrequirements are a lot higher
Recent progress
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Recent progress
• 13% rise in annual sales, helped by a strong contributionfrom Ranbaxy Laboratories Ltd, India’s largest drug maker by revenue, which it bought two years ago.
• Daiichi’s sales increased by 16% in the US and by 28.2% inEurope. In India, revenue rose 292.8% to ¥59.9 billion,
mainly on Ranbaxy’s sales. • Ranbaxy posted a net profit of Rs 963 crore for the quarter
ended 31 March, against a loss of Rs761 crore a year ago. • Sales had improved 60% to Rs2,490 crore, as the firm for
the first time sold medicines in excess of $500 million(Rs2,255 crore) in a quarter.
Outcome of the Deal
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Outcome of the Deal
• Big threat to the survival of the domestic generic
industry
• May just dampen the motivation of other Indianaspirants who want to emulate Ranbaxy's successin global Pharma
• The acquisition will help Daiichi Sankyo to jumpfrom number 22 in the global pharmaceutical sectorto number 15
• Ranbaxy will gain easier access to the much-
coveted Japanese market by operating from withinthe Daiichi Sankyo fold, bypassing a lot ofEuropean and U.S. companies that are finding itdifficult to enter the Japanese market, where safety
and testing requirements are a lot higher
Effect on Stock Market
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Effect on Stock Market
• The share price of Ranbaxy rose 3.86% to Rs526.40 on June 9, two days before the companyannounced its buyout by Daiichi Sankyo.
• The benchmark Sensex plunged 506 points thesame day
Effect on Stock Market
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Effect on Stock Market
• June 10, a day before the deal was announced, theRanbaxy scrip surged 6.52% to Rs 560.75 and theSensex fell 177 points. The stock ended almost flatat Rs 560.80 on June 11
• June 11 The reason as to why the Ranbaxy stockhad been moving against the general market
direction since it became public when the companyannounced about the sale of a majority stake in it tothe Japanese firm Daiichi Sankyo
Effect on Stock Market
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Effect on Stock Market
Other Stock Sizzle
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Other Stock Sizzle
• Zenotech surged 20 per cent • Religare (8.53 per cent) • Fortis Financial Services (10 per cent) • Fortis Healthcare (18.87 per cent) • Krebs Biochemicals (4.92 per cent) • Jupiter Biochemicals (13 per cent)• Orchid increased by 13.56 per cent.
Conclusion
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Conclusion
• The deal is a win-win for both Ranbaxy and
Daiichi.
• For Daiichi, it was important to have some kind ofgeneric play that Novartis has with Sandoz, which
is the second largest generic company in theworld.
• Novartis is a USD 30-35 billion company. Maybe
Daiichi at the very start of that graph is trying to doexactly that.
• They have a great play in Ranbaxy, which has a
manufacturing and research base. It will also
Other Stock Sizzle
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Other Stock Sizzle
References
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References
• www.ranbaxy.com • www.indiamarks.com • www.moneycontrol.com • www.ndtvprofit.com • www.daiichisankyo.com
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