Japanese pharmaceutical group Daiichi Sankyo Co said yesterday it had agreed to buy a majority stake in India’s top drug company Ranbaxy Laboratories for up to US$4.6 billion.
The deal reflects growing efforts by the world’s pharmaceutical giants to cope with fierce competition from generic drugmakers based in low-cost economies such as India.
Daiichi Sankyo said that it had entered a binding deal to acquire the stake owned by the Singh family, which controls Ranbaxy, a leading generic drug company.
It also plans to buy a 20 percent stake from public shareholders and to acquire new shares from the Indian company with the aim of taking a stake of at least 50.1 percent.
Upon completion of the transaction, which is valued at US$3.4 billion to US$4.6 billion, Ranbaxy is expected to become a subsidiary of Daiichi Sankyo.
The deal, which is subject to shareholder and regulatory approval, is expected to be completed by the end of March.
The move will “complement our strong presence in innovation with a new, strong presence in the fast growing business of non-proprietary pharmaceuticals,” Daiichi Sankyo chief executive Takashi Shoda said in a statement.
More than 90 percent of Ranbaxy’s sales come from generic products.
Ranbaxy and other, similar firms vie in the US and Europe to grab first rights to sell inexpensive generic drugs.
Under the terms of the deal, Malvinder Singh, grandson of Ranbaxy founder Bhai Mohan Singh, will continue as chief executive and also become chairman of the board of the Indian group.
“This is a significant milestone in our mission of becoming a research based international pharmaceutical company,” Malvinder Singh said in the statement.
Ranbaxy has expanded abroad by selling inexpensive copies of branded drugs off-patent and through successful challenges to patents owned by Western companies.
It has said it aims to be one of the world’s top-five generic drugmakers by 2012 with sales of US$5 billion.
The Japanese group will pay 737 rupees per share in the Indian company, a 31.4 percent premium to its closing share price on Tuesday.
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