Ranbaxy Acquisition by Daiichi - Sankyo

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By: smart1989 (31 month(s) ago)

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By: sartyal (32 month(s) ago)

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Presentation Transcript

Slide 1: 

Ranbaxy Acquisition By Daiichi - Sankyo

Contents : 

Contents Introduction About the Companies Acquisition Reasons behind Acquisition Advantages and Outcome Effect on Stock Market Conclusion

Ranbaxy Daiichi - Sankyo Deal : 

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

Acquisition : 

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 one Types a) Buyer buys the shares b) Buyer buys the assets of the target company

Advantages of Acquisition : 

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)

Disadvantages of Acquisition : 

Disadvantages of Acquisition Reduced competition and choice for consumers in oligopoly markets (Bad for consumers, although this is good 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

About Ranbaxy : 

About Ranbaxy

About Ranbaxy : 

About Ranbaxy Integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines Serving in over 125 countries and has an expanding international portfolio of affiliates, joint ventures and alliances, ground operations in 49 countries and manufacturing 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

Ranbaxy Success Story : 

Ranbaxy Success Story In 1998, Ranbaxy entered US the world's largest pharmaceuticals market and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in 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 Drug Administration a 180-day exclusivity period to sell simvastatin (Zocor) in the U.S. as a generic drug at 80 mg strength

About Daiichi - Sankyo : 

About Daiichi - Sankyo Daiichi - Sankyo Company, Ltd was established in 2005 through the merger of two leading Japanese pharmaceutical companies Discovery of new medicines in the areas of infectious diseases, cancer, bone and joint diseases, and immune disorders Continuous development of novel drugs that enrich the quality of life for patients around the world Presently, Daiichi - Sankyo is Japans 2nd largest drug maker

Journey of Daiichi - Sankyo : 

Journey of Daiichi - Sankyo 1970s, In Basle a Sankyo office was opened to keep 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 to Sankyo Pharma 2005, Daiichi - Sankyo merger Takashi Shoda is the president & CEO of the company

Ranbaxy Acquisition : 

Ranbaxy Acquisition

Ranbaxy Acquisition : 

Ranbaxy Acquisition Ranbaxy is a well known name in pharmaceutical company in India, with large amount of shares both in Bombay and National stock exchange has now sold major amount of shares to the Japanese company Daiichi Daiichi Sankyo bought out the entire promoter stake of 35 per cent in Ranbaxy Laboratories at Rs 737 per share costing $3.4 billion to $4.6 billion Daiichi Sankyo will hold a majority stake in Ranbaxy, however Ranbaxy will continue to operate as an independent & autonomous Company.

Ranbaxy Acquisition : 

Ranbaxy Acquisition All management and people structures across Ranbaxy were continue as they were. Mr. Malvinder Singh was appointed Chairman of the Board of Directors &member of the Senior Global Management of Daiichi Sankyo ,in addition to his existing responsibilities as CEO & MD, Ranbaxy. Currently the CEO of the company is Mr. Atul Sobti from May 2009 onwards.

Ranbaxy Acquisition : 

Ranbaxy Acquisition SHAREHOLDING PATTERN (BEFORE ACQUISITION)

Ranbaxy Acquisition : 

Ranbaxy Acquisition SHAREHOLDING PATTERN (AFTER ACQUISITION)

Reasons for Takeover : 

Reasons for Takeover Daiichi Sankyo and Ranbaxy believe this transaction provides the significant long-term value for all stakeholders through: A complementary business combination An expanded global reach Strong growth potential Cost competitiveness by optimizing usage of R&D and manufacturing facilities

Reasons for Takeover : 

Reasons for Takeover The R&D pipeline was not delivering enough products, the generic market was not generating adequate returns Ranbaxy had three choices, It could have spent lots of money in acquiring a big generic company to grow inorganically, merge with a global player sell-out. The sell-out option was the most profitable, both for the promoters as well as shareholder Daiichi is a leading, research-based pharmaceutical company and this deal would enable Ranbaxy to explore their shared capabilities in drug development

Financial Highlights:BSE : 

Financial Highlights:BSE

Financials: Charting : 

Financials: Charting Performance Chart

Benefit of the Deal : 

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 give Ranbaxy access to Daiichi 's expertise in research while the Japanese company will benefit from low-cost production on the sub-continent, amid a deepening profits crisis in Japan’s drugs industry. Daiichi will Gain position of major player in Generics.

Outcome of the Deal : 

Outcome of the Deal The acquisition will help Daiichi Sankyo to jump from number 22 in the global pharmaceutical sector to number 15. Ranbaxy will gain easier access to the much-coveted Japanese market by operating from within the Daiichi Sankyo fold, bypassing a lot of European and U.S. companies that are finding it difficult to enter the Japanese market, where safety and testing requirements are a lot higher

Recent progress : 

Recent progress 13% rise in annual sales, helped by a strong contribution from 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% in Europe. 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 : 

Outcome of the Deal Big threat to the survival of the domestic generic industry May just dampen the motivation of other Indian aspirants who want to emulate Ranbaxy's success in global Pharma The acquisition will help Daiichi Sankyo to jump from number 22 in the global pharmaceutical sector to number 15 Ranbaxy will gain easier access to the much-coveted Japanese market by operating from within the Daiichi Sankyo fold, bypassing a lot of European and U.S. companies that are finding it difficult to enter the Japanese market, where safety and testing requirements are a lot higher

Effect on Stock Market : 

Effect on Stock Market The share price of Ranbaxy rose 3.86% to Rs 526.40 on June 9, two days before the company announced its buyout by Daiichi Sankyo. The benchmark Sensex plunged 506 points the same day

Effect on Stock Market : 

Effect on Stock Market June 10, a day before the deal was announced, the Ranbaxy scrip surged 6.52% to Rs 560.75 and the Sensex fell 177 points. The stock ended almost flat at Rs 560.80 on June 11 June 11 The reason as to why the Ranbaxy stock had been moving against the general market direction since it became public when the company announced about the sale of a majority stake in it to the Japanese firm Daiichi Sankyo

Effect on Stock Market : 

Effect on Stock Market

Other Stock Sizzle : 

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 : 

Conclusion The deal is a win-win for both Ranbaxy and Daiichi. For Daiichi, it was important to have some kind of generic play that Novartis has with Sandoz, which is the second largest generic company in the world. Novartis is a USD 30-35 billion company. Maybe Daiichi at the very start of that graph is trying to do exactly that. They have a great play in Ranbaxy, which has a manufacturing and research base. It will also benefit from the cost-competitive advantage.

Other Stock Sizzle : 

Other Stock Sizzle

References : 

References www.ranbaxy.com www.indiamarks.com www.moneycontrol.com www.ndtvprofit.com www.daiichisankyo.com

THANK YOU