project report on acquistion of ranbaxy by daiichi sank yo 2003
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A PROJECT REPORT
ON
“A STUDY ON ACQUISITION OF RANBAXY BY DAIICHI
SANKYO”
SUBMITTED BY
JETESH KUMAR
(Registration no - 200622961)
Submitted in partial fulfillment of the requirements for the award of Post Graduate Diploma in Business Administration
DEPARTMENT OF BUSINESS ADMINISTRATION
SYMBIOSIS CENTRE FOR DISTANCE LEARNING(2006-2008)
1
PROPOSAL
TITLE OF PROJECT - A STUDY ON ACQUISITION OF RANBAXY BY DAIICHI
SUBMITTED BY – JETESH KUMAR
REGISTRATION NO – 200622961
PROGRAMME – P.G.D.B.A (FINANCE)
ADDRESS – H.NO, 3539, CHEEMA PARK, MODEL GRAM, LUDHIANA-141002
GUIDE NAME – Ms. SHALOO CHOPRA
ADDRESS – SRI KRISHNA INSTITUTE OF IT & MANAGEMENT
S.C.F – 56-57, SECOND FLOOR
PHASE-X, MOHALI- 160055
ENAIL – skiimindia@yahoo.com
QUALIFICATION –
DESIGNATION – MANAGING DIRECTOR
EXPERIENCE -
2
DECLARATION
I hereby declare that this Project Report titled “A STUDY ON ACQUISITION OF
RANBAXY BY DAIICHI” submitted by me in partial fulfillment of the requirements
for the award of Post Graduate Diploma in Business Administration to Department of
Business management, SCDL, PUNE, is a bonafide work undertaken by me and has
not been submitted to any other university or Institution for the award of any degree
diploma/certificate or published any time before.
Name of the student Signature of the student
(Jetesh Kumar)
PLACE: Ludhiana
DATE: 17.11.2010
3
ACKNOWLEDGEMENT
I get this opportunity to remember and acknowledge cooperation, support provided by
several individuals out of which this project has involved, I am grateful to all those who
have directly or indirectly contributed to make this project a success.
I would like to thank Ms. Shaloo Chopra, Managing Director, Sri Krishna Institute
of IT & Management Studies for their meticulous guidance throughout my project.
I express my gratitude for her valuable assistance, guidance and suggestions for
completion of my project.
On this occasion I would like to thank my friends for their valuable time that, they have
allocated to me for my completion of this project.
PLACE: LUDHIANA (Jetesh Kumar)
DATE: 17.11.2010
4
CERTIFICATE OF PROJECT GUIDE/SUPERVISOR
Certified that the work incorporated in this Project Report Titled “A STUDY ON
ACQUISITION OF RANBAXY BY DAIICHI” submitted by Jetesh Kumar is his
original work and completed under my supervision.
Material obtained from other sources has been duly acknowledged in the Project Report.
Date: 17.11.2010 Name of the Guide: Ms. Shaloo Chopra
PLACE: MOHALI, PUNJAB Signature of guide
5
CHAPTERISATION
6
S.No Contents Page no
1 CHAPTER 1 – INTRODUCTION 1.1 Need for the study 1.2 Objectives 1.3 Methodolgy 1.4 Scope 1.5 Limitations 1.6 Sources of Data
10-11111112131313
2 CHAPTER 2 - REVIEW LITERATURE 2.1 Merger 2.2 Acquisition 2.3 Takeover 2.4 Types of Merger 2.5 Advantages of Mergers & Acquisitions
15-26161717
17-2424-26
3 CHAPTER 3 - INDUSTRY & COMPANY PROFILE
3.1 SWOT Analysis of Indian Pharma Industry 3.2 History of the companies 3.3 Companies Profile 3.4 Reasons for the Deal
28-42
28-3132-3637-4041-42
4 CHAPTER 4 - DATA ANALYSIS & INTERPRET 4.1 About the Acquisition 4.2 Share Holding of Ranbaxy (Pre Acquisition) 4.3 Share Holding of Daiichi Sankyo(Post Acquisition) 4.4 Interpretation of Shares held Pre & Post Acq. 4.5 Financial Data 4.6 Market Shares
44-5644-45
4647
48-4949-5051-56
5 CHAPTER 5 - FINDINGS & SUGGESTIONS 5.1 Findings 5.2 Suggestions 5.3 Conclusion
58-6158
58-5960-61
6 CHAPTER 6 – BIBLIOGRAPHY 63
7 CHAPTER 7 - ANNEXURE 65-68
7
S.NO. CONTENTS PG. NO.
1 Figure: 3.1 SWOT Analysis of Indian Pharma Industry. 29
2 Table: 4.1 Share Holders of Ranbaxy (Pre Acquisition) 46
3 Figure: 4.1 Share Holders of Ranbaxy (Pre Acquisition) 46
4 Table: 4.2 Share Holders of Daiichi Sankyo (Post Acquisition) 47
5 Table: 4.3 Interpretation of Shares Held Pre & Post
Acquisition.
48
6 Figure: 4.3 Interpretation of Shares Held Pre & Post
Acquisition.
48
7 Table: 4.4 Financial Data of Ranbaxy Laboratories Limited. 50
8 Table: 4.5 Comparative Analysis of Annual Results. 50
9 Figure: 4.4 Comparative Analysis of Annual Results. 51
10 Table: 4.6 Market Share of Daiichi Sankyo. 51
11 Figure: 4.5 Market Share of Daiichi Sankyo. 53
12 Table: 4.7 Comparative Analysis of Companies Spent on R&D.
54
13 Table: 4.8 Market Share of Ranbaxy. 55
14 Figure: 4.7 Market Share of Ranbaxy. 56
15 Table: 7.1 Annual results of Ranbaxy in detail. 65
16 Table: 7.2 Consolidated Balance Sheets of Daiichi Sankyo Co. Ltd.
66-68
8
CHAPTER - 1
INTRODUCTION
9
[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. Every
day 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.
This Thesis, about the Mergers & Acquisition is about the study of dynamics involved as
the companies merge or gets acquired, the external and internal factors that influence this
dynamic aspect and the synergies of the conglomerates to define this topic more clearly,
a corporate merger is defined as “the combination of the assets and liabilities of two firms
to form a single business entity”. In everyday language, the term "acquisition" tends to be
used when a larger firm absorbs a smaller firm, and "merger" tends to be used when the
combination is portrayed to be between equals.
A merger is considered to be successful, if it increases the acquiring firm’s value.
Usually, a merger can be construed as being anti competitive if it makes the market very
saturated after the merger, as opposed to before the merger’s completion, and if the
merger in addition makes it impossible or highly difficult for new firms to enter the
market and present a challenge to the existing corporations.
Mainly, there are three types of mergers – Vertical, Horizontal & Conglomerate Merger
or Potential Competition Merger. A vertical merger can impair competition by preventing
other companies who use the same suppliers or distribution channels to operate normally.
A potential competition or conglomerate merger is said to take place when one company
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merges or buys another company that is anticipated to enter a market and become a
potential competitor to the acquiring company. Cross-border mergers and acquisitions
Comprise a major part of the foreign direct investments or FDIs, which have also been
developing quicker in the past decade. a horizontal merger is an acquisition of a
competitor with an intention to increase the market concentration, and often also to
increase the probability of collusions.
Hence Mergers & Acquisition is the study of a dynamic trend in the Business World.
1.1 - Need for the Study:
• The study deals with the evaluation of financial aspects of 2 merged companies.
• The emphasis is on evaluation of Pre & Post merger performance related to Ranbaxy
and Daiichi Sankyo.
1.2 - Objectives:
• To know the pre merger and post merger performance.
• To analyze the causes of Mergers & Acquisitions.
• To acknowledge the effects of Mergers & Acquisitions on the participating
Parties i.e., Daiichi Sankyo & Ranbaxy.
• To study the influence of Financial Structures while in
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the process of Mergers & Acquisitions
1.3 – Methodolgy:
The methodology employed in this study is designed to produce report meeting the stated
objectives. The project consists of three phases:
1 st Phase: ( Secondary Data Search )
Assessing: It will include collection of information about the mergers &
acquistions, models and approaches, SEBI guidelines, implications of new
guidelines for risk management of mergers & acquisitions and Basel Norms
with the help of secondary data sources.
Envisioning: It would include the understanding the framework of mergers &
acquistions under the Basel Accords.
Building and Designing: It includes developing the research report objectives
and methodology. It will encompass other issues related to its implementation
which would be necessary for proper understanding of the concepts.
2 nd Phase: ( Primary data search )
In primary search situation of mergers & acquistions will be examine in INDIA,
how companies handling mergers & acquistions, what are the procedures they are
following to handle.
The project will also discuss in brief the various principles for the mergers &
acquistions:
Establishing an appropriate business strategy.
Operating under SEBI guidelines.
Maintaining an appropriate administration, measurement and monitoring
process.
Ensuring adequate controls.
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1.4 - Scope:
• The scope of the project mainly deals with the pre merger and post merger of Ranbaxy
& Daiichi Sankyo which has been taken place during the year 2008.
1.5 - Limitations:
• The study is confined only to 2 companies of Mergers & Acquisitions’ i.e, Daiichi
Sankyo & Ranbaxy.
• It evaluates the performance of a company. (2008-09)
• Confined only to 1 year data prior to acquisition and after acquisition.
1.6 - Sources of data:
• The entire project is based on the secondary data mainly which is collected through
various sources like books, journals, company published data and websites.
13
CHAPTER – 2
REVIEW LITERATURE
14
[2] - REVIEW LITERATURE
We have been learning about the companies coming together to from another
company and companies taking over the existing companies to expand their business.
With recession taking toll of many Indian businesses and the feeling of insecurity
surging over our businessmen, it is not surprising when we hear about the immense
numbers of corporate restructurings taking place, especially in the last couple of years.
Several companies have been taken over and several have undergone internal
restructuring, whereas certain companies in the same field of business have found it
beneficial to merge together into one company.
In this context, it would be essential for us to understand what corporate
restructuring and mergers and acquisitions are all about.
All our daily newspapers are filled with cases of mergers, acquisitions, spin-offs,
tender offers, & other forms of corporate restructuring. Thus important issues both for
business decision and public policy formulation have been raised. No firm is regarded
safe from a takeover possibility. On the more positive side Mergers & Acquisition’s may
be critical for the healthy expansion and growth of the firm. Successful entry into new
product and geographical markets may require Mergers & Acquisition’s at some stage in
the firm's development. Successful competition in international markets may depend on
capabilities obtained in a timely and efficient fashion through Mergers & Acquisition's.
Many have argued that mergers increase value and efficiency and move resources to their
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highest and best uses, thereby increasing shareholder value. .
To opt for a merger or not is a complex affair, especially in terms of the
technicalities involved. We have discussed almost all factors that the management may
have to look into before going for merger. Considerable amount of brainstorming would
be required by the managements to reach a conclusion. E.g. A due diligence report would
clearly identify the status of the company in respect of the financial position along with
the net worth and pending legal matters and details about various contingent liabilities.
Decision has to be taken after having discussed the pros & cons of the proposed merger
& the impact of the same on the business, administrative costs benefits, addition to
shareholders' value, tax implications including stamp duty and last but not the least also
on the employees of the Transferor or Transferee Company.
2.1 MERGER:
Merger is defined as combination of two or more companies into a single company
where one survives and the others lose their corporate existence. The survivor acquires all
the assets as well as liabilities of the merged company or companies. Generally, the
surviving company is the buyer, which retains its identity, and the extinguished company
is the seller.
Merger is also defined as amalgamation. Merger is the fusion of two or more
existing companies. All assets, liabilities and the stock of one company stand transferred
to Transferee Company in consideration of payment in the form of:
Equity shares in the transferee company,
Debentures in the transferee company,
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Cash, or
A mix of the above modes.
2.2 ACQUISITION:
Acquisition in general sense is acquiring the ownership in the property. In the
context of business combinations, an acquisition is the purchase by one company of a
controlling interest in the share capital of another existing company.
Methods of Acquisition:
An acquisition may be affected by
a) Agreement with the persons holding majority interest in the company
management like members of the board or major shareholders commanding
majority of voting power;
b) Purchase of shares in open market;
c) To make takeover offer to the general body of shareholders;
d) Purchase of new shares by private treaty;
e) Acquisition of share capital through the following forms of considerations viz.
Means of cash, issuance of loan capital, or insurance of share capital.
2.3 TAKEOVER:
A ‘takeover’ is acquisition and both the terms are used interchangeably.
Takeover differs from merger in approach to business combinations i.e. The
process of takeover, transaction involved in takeover, determination of share exchange or
cash price and the fulfillment of goals of combination all are different in takeovers than
in mergers. For example, process of takeover is unilateral and the offeror company
decides about the maximum price. Time taken in completion of transaction is less in
17
takeover than in mergers, top management of the offeree company being more co-
operative.
De-merger or corporate splits or division:
De-merger or split or divisions of a company are the synonymous terms signifying
a movement in the company.
Purpose of Mergers & Acquisitions
The purpose for an offeror company for acquiring another company shall be
reflected in the corporate objectives. It has to decide the specific objectives to be
achieved through acquisition. The basic purpose of merger or business combination is to
achieve faster growth of the corporate business. Faster growth may be had through
product improvement and competitive position.
Other possible purposes for acquisition are short listed below: -
(1) Procurement of supplies:
1. To safeguard the source of supplies of raw materials or intermediary product;
2. To obtain economies of purchase in the form of discount, savings in
transportation costs, overhead costs in buying department, etc.;
3. To share the benefits of suppliers economies by standardizing the materials.
(2) Revamping production facilities:
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1. To achieve economies of scale by amalgamating production facilities through
more intensive utilization of plant and resources;
2. To standardize product specifications, improvement of quality of product,
expanding
3. Market and aiming at consumers satisfaction through strengthening after sale
Services;
4. To obtain improved production technology and know-how from the offered
company
5. To reduce cost, improve quality and produce competitive products to retain and
Improve market share.
(3) Market expansion and strategy:
1. To eliminate competition and protect existing market;
2. To obtain a new market outlets in possession of the offeree;
3. To obtain new product for diversification or substitution of existing products and
to enhance the product range;
4. Strengthening retain outlets and sale the goods to rationalize distribution;
5. To reduce advertising cost and improve public image of the offeree company;
6. Strategic control of patents and copyrights.
(4) Financial strength:
1. To improve liquidity and have direct access to cash resource;
2. To dispose of surplus and outdated assets for cash out of combined enterprise;
3. To enhance gearing capacity, borrow on better strength and the greater assets
backing;
4. To avail tax benefits;
5. To improve EPS (Earning Per Share).
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(5) General gains:
1. To improve its own image and attract superior managerial talents to manage its
affairs;
2. To offer better satisfaction to consumers or users of the product.
(6) Own developmental plans:
The purpose of acquisition is backed by the offeror company’s own
developmental plans.
A company thinks in terms of acquiring the other company only when it has
arrived at its own development plan to expand its operation having examined its own
internal strength where it might not have any problem of taxation, accounting, valuation,
etc. But might feel resource constraints with limitations of funds and lack of skill
managerial personnel’s. It has to aim at suitable combination where it could have
opportunities to supplement its funds by issuance of securities, secure additional financial
facilities, eliminate competition and strengthen its market position.
(7) Strategic purpose:
The Acquirer Company view the merger to achieve strategic objectives through
alternative type of combinations which may be horizontal, vertical, product expansion,
market extensional or other specified unrelated objectives depending upon the corporate
strategies. Thus, various types of combinations distinct with each other in nature are
adopted to pursue this objective like vertical or horizontal combination.
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(8) Corporate friendliness:
Although it is rare but it is true that business houses exhibit degrees of
cooperative spirit despite competitiveness in providing rescues to each other from hostile
takeovers and cultivate situations of collaborations sharing goodwill of each other to
achieve performance heights through business combinations. The combining corporate
aim at circular combinations by pursuing this objective.
(9) Desired level of integration:
Mergers and acquisition are pursued to obtain the desired level of integration
between the two combining business houses. Such integration could be operational or
financial. This gives birth to conglomerate combinations. The purpose and the
requirements of the offeror company go a long way in selecting a suitable partner for
merger or acquisition in business combinations.
2.4 TYPES OF MERGER:
Merger or acquisition depends upon the purpose of the offeror company it wants
to achieve. Based on the offerors’ objectives profile, combinations could be vertical,
horizontal, circular and conglomeratic as precisely described below with reference to the
purpose in view of the offeror company.
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(A) Vertical combination:
A company would like to takeover another company or seek its merger with that
company to expand espousing backward integration to assimilate the resources of supply
and forward integration towards market outlets. The acquiring company through merger
of another unit attempts on reduction of inventories of raw material and finished goods,
implements its production plans as per the objectives and economizes on working capital
investments. In other words, in vertical combinations, the merging undertaking would be
either a supplier or a buyer using its product as intermediary material for final production.
The following main benefits accrue from the vertical combination to the acquirer
company i.e.
1. It gains a strong position because of imperfect market of the intermediary
products, scarcity of resources and purchased products;
2. Has control over products specifications.
(B) Horizontal combination:
It is a merger of two competing firms which are at the same stage of industrial
process. The acquiring firm belongs to the same industry as the target company. The mail
purpose of such mergers is to obtain economies of scale in production by eliminating
duplication of facilities and the operations and broadening the product line, reduction in
investment in working capital, elimination in competition concentration in product,
reduction in advertising costs, increase in market segments and exercise better control on
market.
(C) Circular combination:
22
Companies producing distinct products seek amalgamation to share common
distribution and research facilities to obtain economies by elimination of cost on
duplication and promoting market enlargement. The acquiring company obtains benefits
in the form of economies of resource sharing and diversification.
(D) Conglomerate combination:
It is amalgamation of two companies engaged in unrelated industries like DCM
and Modi Industries. The basic purpose of such amalgamations remains utilization of
financial resources and enlarges debt capacity through re-organizing their financial
structure so as to service the shareholders by increased leveraging and EPS, lowering
average cost of capital and thereby raising present worth of the outstanding shares.
Merger enhances the overall stability of the acquirer company and creates balance in the
company’s total portfolio of diverse products and production processes.
2.5 ADVANTAGES OF MERGERS AND ACQUISTIONS:
Mergers and takeovers are permanent form of combinations which vest in
management complete control and provide centralized administration which are not
available in combinations of holding company and its partly owned subsidiary.
Shareholders in the selling company gain from the merger and takeovers as the
premium offered to induce acceptance of the merger or takeover offers much more
price than the book value of shares. Shareholders in the buying company gain in the
long run with the growth of the company not only due to synergy but also due to
“boots trapping earnings”.
Mergers and acquisitions are caused with the support of shareholders, manager’s
ad promoters of the combing companies. The factors, which motivate the
23
shareholders and managers to lend support to these combinations and the resultant
consequences they have to bear, are briefly noted below based on the research work
by various scholars globally.
(1) From the standpoint of shareholders:
Investment made by shareholders in the companies subject to merger
should enhance in value. The sale of shares from one company’s shareholders to
another and holding investment in shares should give rise to greater values i.e. The
opportunity gains in alternative investments. Shareholders may gain from merger in
different ways viz. From the gains and achievements of the company i.e. Through
(a) Realization of monopoly profits;
(b) Economies of scales;
(c) Diversification of product line;
(d) Acquisition of human assets and other resources not available otherwise;
(e) Better investment opportunity in combinations.
One or more features would generally be available in each merger where
shareholders may have attraction and favour merger.
(2) From the standpoint of managers:
Managers are concerned with improving operations of the company, managing the
affairs of the company effectively for all round gains and growth of the company
which will provide them better deals in raising their status, perks and fringe benefits.
Mergers where all these things are the guaranteed outcome get support from the
managers. At the same time, where managers have fear of displacement at the hands
24
of new management in amalgamated company and also resultant depreciation from
the merger then support from them becomes difficult.
(3) Promoter’s gains:
Mergers do offer to company promoters the advantage of increasing the size
of their company and the financial structure and strength. They can convert a closely
held and private limited company into a public company without contributing much
wealth and without losing control.
(4) Benefits to general public:
Impact of mergers on general public could be viewed as aspect of benefits and
costs to:
(a) Consumer of the product or services;
(b) Workers of the companies under combination;
(c) General public affected in general having not been user or consumer or the
worker in the companies under merger plan.
(a) Consumers:
The economic gains realized from mergers are passed on to consumers in the
form of lower prices and better quality of the product which directly raise their
standard of living and quality of life. The balance of benefits in favour of consumers
will depend upon the fact whether or not the mergers increase or decrease competitive
25
economic and productive activity which directly affects the degree of welfare of the
consumers through changes in price level, quality of products, after sales service, etc.
(b) Workers community:
The merger or acquisition of a company by a conglomerate or other acquiring
company may have the effect on both the sides of increasing the welfare in the form
of purchasing power and other miseries of life. Two sides of the impact as discussed
by the researchers and academicians are: firstly, mergers with cash payment to
shareholders provide opportunities for them to invest this money in other companies
which will generate further employment and growth to uplift of the economy in
general. Secondly, any restrictions placed on such mergers will decrease the growth
and investment activity with corresponding decrease in employment. Both workers
and communities will suffer on lessening job Opportunities, preventing the
distribution of benefits resulting from diversification of production activity.
(c) General public:
Mergers result into centralized concentration of power. Economic power is to be
understood as the ability to control prices and industries output as monopolists. Such
monopolists affect social and political environment to tilt everything in their favour to
maintain their power ad expand their business empire. These advances result into
economic exploitation. But in a free economy a monopolist does not stay for a longer
period as other companies enter into the field to reap the benefits of higher prices set in
by the monopolist. This enforces competition in the market as consumers are free to
substitute the alternative products. Therefore, it is difficult to generalize that mergers
affect the welfare of general public adversely or favorably. Every merger of two or more
companies has to be viewed from different angles in the business practices which protects
26
the interest of the shareholders in the merging company and also serves the national
purpose to add to the welfare of the employees, consumers and does not create hindrance
in administration of the Government policies.
CHAPTER – 3
INDUSTRY & COMPANY
PROFILE
27
[3] - INDUSTRY AND COMPANY PROFILE
The pharmaceutical industry develops, produces, and markets drugs licensed for use as
medications. Pharmaceutical companies can deal in generic and/or brand medications.
They are subject to a variety of laws and regulations regarding the patenting, testing and
marketing of drugs.
The earliest drugstores date back to the Middle Ages. The first known drugstore was
opened by Arabian pharmacists in Baghdad in 754, many more soon began operating
throughout the medieval Islamic world and eventually medieval Europe. By the 19th
century, many of the drug stores in Europe and North America had eventually developed
into larger pharmaceutical companies.
Most of today's major pharmaceutical companies were founded in the late 19th and early
20th centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin,
became mass-manufactured and distributed. Switzerland, Germany and Italy had
particularly strong industries, with the UK, US, Belgium and the Netherlands following
suit.
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3.1 SWOT ANALYSIS OF INDIAN PHARMA INDUSTRY
It is often said that the pharma sector has no cyclical factor attached to it. Irrespective
of whether the economy is in a downturn or in an upturn, the general belief is that
demand for drugs is likely to grow steadily over the long-term. True in some sense. But
are there risks? This article gives a perspective of the Indian pharma industry by carrying
out a SWOT analysis (Strength, Weakness, Opportunity, Threat).
Before we start the analysis lets look a little back in the industry’s last six years
performance. The Industry is a largely fragmented and highly competitive with a large
number of players having interest in it. The following chart shows the breakup of the
growth (YoY) of Indian pharmaceutical industry in last six years.
Figure: 3.1 SWOT Analysis of Indian Pharma Industry.
*Volume growth of existing products
The SWOT analysis of the industry reveals the position of the Indian pharma industry in
respect to its internal and external environment.
29
Strengths:
1. Indian with a population of over a billion is a largely untapped market. In fact the
penetration of modern medicine is less than 30% in India. To put things in
perspective, per capita expenditure on health care in India is US$ 93 while the
same for countries like Brazil is US$ 453 and Malaysia US$189.
2. The growth of middle class in the country has resulted in fast changing lifestyles
in urban and to some extent rural centres. This opens a huge market for lifestyle
drugs, which has a very low contribution in the Indian markets.
3. Indian manufacturers are one of the lowest cost producers of drugs in the world.
With a scalable labour force, Indian manufactures can produce drugs at 40% to
50% of the cost to the rest of the world. In some cases, this cost is as low as 90%.
4. Indian pharmaceutical industry posses excellent chemistry and process
reengineering skills. This adds to the competitive advantage of the Indian
companies. The strength in chemistry skill help Indian companies to develop
processes, which are cost effective.
Weakness:
1. The Indian pharma companies are marred by the price regulation. Over a period
of time, this regulation has reduced the pricing ability of companies. The NPPA
(National Pharma Pricing Authority), which is the authority to decide the various
pricing parameters, sets prices of different drugs, which leads to lower
profitability for the companies. The companies, which are lowest cost producers,
are at advantage while those who cannot produce have either to stop production or
bear losses.
2. Indian pharma sector has been marred by lack of product patent, which prevents
global pharma companies to introduce new drugs in the country and discourages
30
innovation and drug discovery. But this has provided an upper hand to the Indian
pharma companies.
3. Indian pharma market is one of the least penetrated in the world. However,
growth has been slow to come by. As a result, Indian majors are relying on
exports for growth. To put things in to perspective, India accounts for almost 16%
of the world population while the total size of industry is just 1% of the global
pharma industry.
4. Due to very low barriers to entry, Indian pharma industry is highly fragmented
with about 300 large manufacturing units and about 18,000 small units spread
across the country. This makes Indian pharma market increasingly competitive.
The industry witnesses price competition, which reduces the growth of the
industry in value term. To put things in perspective, in the year 2003, the industry
actually grew by 10.4% but due to price competition, the growth in value terms
was 8.2% (prices actually declined by 2.2%).
Opportunities:
1. The migration into a product patent based regime is likely to transform industry
fortunes in the long term. The new patent product regime will bring with it new
innovative drugs. This will increase the profitability of MNC pharma companies
and will force domestic pharma companies to focus more on R&D. This
migration could result in consolidation as well. Very small players may not be
able to cope up with the challenging environment and may succumb to giants.
2. Large number of drugs going off-patent in Europe and in the US between 2005 to
2009 offers a big opportunity for the Indian companies to capture this market.
Since generic drugs are commodities by nature, Indian producers have the
competitive advantage, as they are the lowest cost producers of drugs in the
world.
31
3. Opening up of health insurance sector and the expected growth in per capita
income are key growth drivers from a long-term perspective. This leads to the
expansion of healthcare industry of which pharma industry is an integral part.
4. Being the lowest cost producer combined with FDA approved plants, Indian
companies can become a global outsourcing hub for pharmaceutical products.
Threats:
1. There are certain concerns over the patent regime regarding its current structure.
It might be possible that the new government may change certain provisions of
the patent act formulated by the preceding government.
2. Threats from other low cost countries like China and Israel exist. However, on the
quality front, India is better placed relative to China. So, differentiation in the
contract manufacturing side may wane.
3. The short-term threat for the pharma industry is the uncertainty regarding the
implementation of VAT. Though this is likely to have a negative impact in the
short-term, the implications over the long-term are positive for the industry.
3.2 HISTORY OF THE COMPANIES:
HISTORY OF DAIICHI SANKYO COMPANY LIMITED.
32
In 1894, Matasaku Shibora, Shotaro, Genjio Fukuji started the small enterprise in Tokyo
named as Sankyo Pharma Ltd.
In 1913, Dr. Katsuzaemon Keimatsu and others established Arsemin Shokai named small
enterprise.
In 1916, Dr.K.Keimatsu gave the new name as; Daiichi Pharmaceuticals Co. Ltd.
In 1949 both companies separately listed on Tokyo Stock exchange.
Established Sankyo USA Corporation (New York City, USA)
Established Sankyo Europa GmbH (Dusseldorf, Germany), in 1990.
In April 2005, establishment of DAIICHI SANKYO COMPANY LIMITED (Sankyo
Co., Ltd. and Daiichi Pharmaceutical Co., Ltd. a joint-holding company).
From 1st April2007, it started its operation as the newly formed “DAIICHI SANKYO
GROUP”.
HISTORY OF RANBAXY LABORATORY LIMITED.
IN 1960;
Shri. Surendar Singh started the Ranbaxy Laboratories (pvt.) ltd.
33
IN 1973;
RANBAXY pharmaceuticals ltd. Make an I.P.O. & set up a multi-chemical plant in
Mohali, Punjab.
IN 1977;
RANBAXY’s first joint venture was set up in Logas (Nigeria).
IN 1988;
It granted its first U.S.Patent for product,”Doxycyline”.
IN 1992;
It entered into an agreement with Eli Liily & co. of U.S.A. for setting up a joint
Venture in India to market select Lilly products.
IN 1995;
It acquired “Ohm Laboratories Ltd.”, a manufacturing facility in U.S.A. Then it
becomes the wholly subsidiary of Ranbaxy.
IN 2000;
It acquired the German company Bayer’s Generic Business (trading under the
name of Basics.) and also entered into Brazil, the largest Pharmaceuticals market in
South Africa.
IN 2001;
Ranbaxy U.S.A. (the wholly subsidiary of R.L.L.) crossed sales of US $ 100
million and become the fastest growing company in the U.S.
34
IN 2003;
Ranbaxy and Glaxo SmithKline Plc (GSK) enter into a global alliance for drug
discovery & development.
IN 2005;
Ranbaxy made joint venture with Nippon Chemiphar in Japan (known as Nihon
Pharmaceuticals Industries Ltd.). This joint venture launched the first product Vagseal for
Diabetes.
IN 2008;
It redefined it’s business model and bring Daiichi Sankyo as a majority partner
to create strategic combination of an innovator and Generic power house.
IN 2009;
Daiichi Sankyo and Ranbaxy announced reconstitution of Ranbaxy executive
leadership.
3.3 COMPANIES PROFILE:
35
PROFILE OF DAIICHI SANKYO
Company name:
DAIICHI SANKYO COMPANY, LIMITED.
Nature of Enterprise:
Research & Development, Manufacturing, import, Sales & Marketing of pharmaceutical
products.
Head Office Address:
3-5-1, Nihonbashi-honcho, Chuo-ku, Tokyo,
103-8426, Japan.
Phone: +81-3-6225-1111.
BOARD OF DIRECTORS:
Representative Director and Chairman: Mr. Kiyoshi Morita.
Representative Director and President & CEO: Mr.Takashi Shoda.
Executive Directors:
Mr.Ryuzo Takada.
36
Mr. Hitoshi Matsuda.
Mr.Tsutomu Une .
Mr.Takeshi Ogita.
Outside Directors: Mr. Kunio Nihira .
Mr.Yoshifumi
Nishikawa.
Mr.Jotaro Yabe .
Mr.Takashi Okimoto
AUDITORS:
Internal: Teruo Takayanagi & Hikaru Nagata.
External: Kaoru Schimada & Koukei Higuchi.
WOKFORCE:
28,895 people. (consolidated as on 31st march 2009.)
MISSION:
To Contribute to the Enrichment of Quality of life around the World through the Creation
and Provision of Innovative Pharmaceuticals.
37
VISION:
“Global drug-discovery-oriented company”. Realization of Global Pharma Innovator.
DAIICHI SANKYO Group aims for the realization of the Global Pharma Innovator in
2015. “ Global” means the international scope of corporate activities. “Pharma
Innovator” means a company that continuously develops innovative drugs.
VALUES:
Social Value
Fulfill the responsibility as a member of society by performing duties.
Contribute to society through activities such as the active consideration of the
environment, support of community development, and efforts to help solve
problems faced by community.
Economic value
Become a company that grows robustly, creating special values and premiums.
Humanistic value
Become a company whose members are qualified professionals who work all over
the world.
Provide motivating jobs, setting equal opportunities to perform, supporting career
development, and rewarding our staff according to their jobs and performance
38
PROFILE OF RANBAXY LABORATORIES LIMITED.
Company name:
RANBAXY LABORATORIES LIMITED.
Nature of Enterprise:
Research & Development, Manufacturing, Import, and Sales & Marketing of
pharmaceutical products (mainly generic products).
Head Office Address:
Plot no- 90, Sector 32,
Gurgaon, 122001,
Haryana, India.
39
BOARD OF DIRECTORS:
Dr. Tsutomu Une
Chairman
Non-executive and
Independent director.
Mr. Atul Sobti
Chief Executive Officer &
Managing Director.
Mr. Takashi Shoda
Non-Executive &
Non Independent Director.
Dr. Anthony H. Wild
Independent Director.
Mr. Rajesh V. Shah
Independent Director.
Mr. Akihiro Watanabe
Independent Director.
40
MISSION:
To become a research based pharmaceutical company.
VALUES:
Achieve customer satisfaction is fundamental to the business.
Provides products and services of the highest quality.
Ensure profitable growth & enhance wealth of shareholders.
Be a responsible corporate citizen.
VISION 2012:
Achieve significant business in proprietary prescription products by 2012 with a
strong presence in developed market.
41
3.4 - REASONS FOR THE DEAL
Daiichi Sankyo and Ranbaxy believe this transaction provides the significant long-term
value for all stakeholders through:
(i) A complementary business combination that provides sustainable growth by
diversification that spans the full spectrum of the pharmaceutical business. RLL &
D.S. are major player in the world pharmaceuticals industry. Both have potential
to cater the demand and through research to generate the demand for further
development of the business.
(ii) An expanded global reach that enables leading market positions in both mature
and emerging markets with proprietary and non-proprietary products. Ranbaxy
has large market in India and neighbour countries, while .D.S. has wide market in
developed countries like: Japan, U.S., Europe and U.K. So, both can extend their
market and provide best quality services & products.
(iii) Strong growth potential by effectively managing opportunities across
the full pharmaceutical life-cycle. The world pharmaceutical industry is growing
at 11%.so, this acquisition will beneficial to meet the extending opportunities of
the industry. The future industry scenario demanding more quality products which
can definitely be cater by this acquisition.
(iv)Cost competitiveness by optimizing usage of R&D and manufacturing facilities
of both companies, especially in India. As in terms of the labour cost,
manufacturing cost, exporting cost lower than the other countries, it reduces the
cost per unit and that is directly beneficial to customers. Cost advantage get in the
India, by that surplus amount utilise into R&D.
42
CHAPTER – 4
DATA ANALSIS &
INTERPRETATION
43
[4] - DATA ANALYSIS AND INTERPRETATION
4.1 - ABOUT THE ACQUISITON
On 11th June 2008, Daiichi Sankyo Company Limited, one of the largest
pharmaceutical companies in Japan and Ranbaxy Laboratories Limited , among the top
10 generic companies in the world and India’s largest pharmaceutical company,
announced that a binding Share Purchase and Share Subscription Agreement (the
“SPSSA”) was entered into between Daiichi Sankyo, Ranbaxy and the Singh family, the
largest and controlling shareholders of Ranbaxy (the “Sellers”), pursuant to which
Daiichi Sankyo will acquire the entire shareholding of the Sellers in Ranbaxy and further
seek to acquire the majority of the voting capital of Ranbaxy at a price of Rs737 per
share with the total transaction value expected to be between US$3.4 to US$4.6 billion
(currency exchange rate: US$1=Rs43). In terms of the Indian currency, approximately
Rs.20, 000 corers.
The SPSSA has been approved by the Boards of Directors of both companies. Daiichi
Sankyo is expected to acquire the majority equity stake in Ranbaxy by a combination of;
(i) Purchase of shares held by the Sellers(54.30%-Singh & his family),
(ii) Preferential allotment of equity shares(9.12% to buyer),
(iii) An open offer to the public shareholders for 20% of Ranbaxy’s shares, as per
Indian Regulation Act, And
44
(iv) Daiichi Sankyo’s exercise of a portion or all of the share warrants to be issued
on a
Preferential bases. All shares will be acquired/issued at a price of rs.737 per
share.
This purchase price represents a premium of 53.5% to Ranbaxy’s average daily closing
price on the National Stock Exchange for the three months ending on June 10, 2008 and
31.4% to such closing price on June 10, 2008.
The deal was financed through a mix of bank debt facilities and existing cash resources of
Daiichi Sankyo. Nomura Securities Co., Ltd., the Japan headquartered investment bank,
acted as the exclusive financial advisor, Jones Day as the legal advisor outside India, P&A
Law Offices as the legal advisor in India, Mehta Partners LLC as the strategic business
advisor and Ernst & Young as the accounting and tax advisor to Daiichi Sankyo.
Religare Capital Markets Limited, a wholly owned subsidiary of Religare Enterprises
Limited, is the exclusive financial advisor to Ranbaxy and the Singh family. Vaish
Associates are the legal advisors to Ranbaxy and the Singh family.
45
4.2 - SHARE HOLDING OF RANBAXY (PRE ACQUISITION)
Table: 4.1 Share Holders of Ranbaxy (Pre Acquisition)
SHARES HELD BY %
SINGH 34.82
SINGH’S FAMILY 19
MUTUAL FUND 5.56
BANKS 1.71
INSURANCE COMPANIES 14.39
FOREIGN INSTITUTIONAL INV.(F.I.I) 12.42
GENERAL PUBLIC 12.1
Figure: 4.1 Share Holders of Ranbaxy (Pre Acquisition
Before acquisition the Singh had 34.82% of the holding in Ranbaxy.
His family had 19% of the shares.
Mutual fund companies holding were 5.56%.
Banks had 1.71%.
Insurance companies hold 14.39%
46
General public 12.1%
4.3 - SHARE HOLDING OF DAIICHI SANKYO (POST
ACQUISITION)
Table: 4.2 Share Holders of Daiichi Sankyo (Post Acquisition)
SHARES HELD BY %
DAIICHI SANKYO 63.92
MUTUAL FUND 2.58
BANKS 0.37
INSURANCE COMPANIES 9.19
FOREIGN INSTITUTIONAL INV.(F.I.I) 4.41
GENERAL PUBLIC 19.53
Figure: 4.2 Share Holders of Daiichi Sankyo (Post Acquisition)
After the acquisition the singh and his family’s complete stake in Ranbaxy had been
taken over by Daiichi Sankyo which is 63.92% of total holdings.
47
The holdings by mutual fund, banks, insurance companies and foreign institutional
investments decreased by 53.9%, 58.47%, 36.13%, 64.49% respectively. Where as the
general public holdings were increased by 61.40%.
4.4 - INTERPRETATION OF SHARES HELD PRE & POST
ACQUISITION
Table: 4.3 Interpretation of Shares Held Pre & Post Acquisition.
SHARES HELD BY PRE % POST % CHANGE
%
SINGH 34.82 - (100)
SINGH’S FAMILY 19 - (100)
DAIICHI SANKYO - 63.92 63.92
MUTUAL FUND 5.56 2.58 (53.59)
BANKS 1.71 0.32 (58.47)
INSURANCE COMPANY 14.39 9.19 (36.13)
F.I.I 12.42 4.41 (64.49)
GENERAL PUBLIC 12.1 19.53 61.40
Figure: 4.3 Interpretation of Shares Held Pre & Post Acquisition.
48
INTERPRETATION:
The above chart shows % of shares held prior and post acquisition, it is clear that the
Singh and his family have completely sold their stake to Daiichi Sankyo which lead to
100% changes in share acquisition, with this acquisition Daiichi Sankyo has acquired
63.92% of the total shares. Other companies such as mutual funds, banks, insurance
companies and F.I.I share holdings have decreased to some extent.
Where as the general public holdings have been increased up to 62%. This is because
Daiichi Sankyo expects to increase its stake in Ranbaxy through various means such as
preferential allotment, public offer and preferential issue of warrants to acquire a majority
in Ranbaxy, i.e. at least 50.1%.
49
4.5 - FINANCIAL DATA
RANBAXY LABORATORIES LTD. (Last 5 years).
Table: 4.4 Financial Data of Ranbaxy Laboratories Limited.
Annual results in brief (in crores)
Dec ' 09 Dec ' 08 Dec ' 07 Dec ' 06 Dec ' 05
Sales 4,784.76 4,494.52 4,071.29 3,973.56 3,490.13
Operating profit 822.89 239.75 546.87 559.45 65.76
Interest (109.85) 893.40 93.43 58.10 26.41
Gross profit 1,210.12 (562.40) 893.14 580.92 249.01
EPS (Rs) 13.61 (24.56) 16.56 10.37 6.01
Table: 4.5 Comparative Analysis of Annual Results.
COMPARATIVE ANALYSIS OF ANNUAL RESULTS (in crores)
Base
yr. 05
Dec. 06 %
diff.
Dec. 07 %
diff.
Dec. 08 %
diff.
Dec. 09 % diff.
Sales 3490.13 3973.56 13.85 4071.29 16.65 4494.52 28.77 4784.76 37.09
50
Operating
profit
65.76 559.45 750.74 546.87 731.61 239.75 264.58 822.89 1151.35
Interest 26.41 58.10 120 93.43 253.76 893.40 3282.8 (109.85) (515)
Gross
profit
249.01 580.92 133.29 893.14 258.67 (562.40) (221) 1210.12 385.97
EPS (Rs) 6.01 10.37 72.54 16.56 175.54 (24.56) (508) 13.61 126.45
Figure: 4.4 Comparative Analysis of Annual Results.
INTERPRETATION:
51
From the above graph it is found that the sales have been increasing which is considered
to be positive trend for the future.
The operating profit shows a fluctuating movement, but it is showing a increasing trend
of the last year.
The interest has been showing a increasing trend unless and until the last year.
Gross profit has increased consistently over the years and there is a momentum in it since
last year.
There has been a double fold increase in the EPS share.
4.6 - MARKET SHARES
MARKET SHARE OF DAIICHI SANKYO:
Table: 4.6 Market Share of Daiichi Sankyo.
RANK NAME OF THE COMPANY TOTAL
REVENUE(US
D millions)
R&D(USD
millions)
1 PFIZER (U.S.) 70,696 11,318
2 JHONSON &JHONSON (U.S.) 63,747 N.A.
52
3 BAYER (GERMANY) 48,149 3,770
4 HOFFMAN-LA ROCHE (SWIS) 43,970 2,348
5 NOVARTIS (SWIS) 41,460 3,221
20 DAIICHI SANKYO CO.LTD.(JAPAN) 9,682 1,597
(AS YEAR ENDING ON 31ST MARCH,2008.WIKIPEDIA.COM)
Figure: 4.5 Market Share of Daiichi Sankyo.
53
The above graph indicates the revenue of the top companies in the world and the amount
of money spent on Research & Development. Daiichi has spent more amount in terms of
percentage when compared to other top companies in the world. It has spent 16.5% of its
total revenue.
COMPARTATIVE ANALYSIS OF THE COMPANIES SPENT ON
REASEARCH AND DEVELOPMENT
Table: 4.7 Comparative Analysis of Companies Spent on R&D.
RANK NAME OF THE
COMPANY
TOTAL
REVENUE(USD
millions)
% OF REVENUE SPENT ON R&D
1 PFIZER (U.S.) 70,696 16
2 JHONSON
&JHONSON
(U.S.)
63,747 N.A.
3 BAYER
(GERMANY)
48,149 7
4 HOFFMAN-LA 43,970 5.34
54
ROCHE (SWIS)
5 NOVARTIS
(SWIS)
41,460 7.76
20 DAIICHI
SANKYO
CO.LTD.(JAPAN)
9,682 16.5
From the above table it is clear that Daiichi Sankyo has spent much of its revenue in
terms of percentage on R&D while compared to its other competitors’. It has spent 16.5%
of its total revenue which is more when compared to the other top companies.
This move indicates the company is trying to invent more drugs and increase its patents
further, which will ensure that the company will increase its revenue further.
MARKET SHARE OF RANBAXY:
Table: 4.8 Market Share of Ranbaxy.
RANK NAME OF THE COMPANY %Of Total
market
acquired
1 RANBAXY LABORATORIES LTD. 5.12
2 CIPLA PHRMA.LTD. 5.02
3 GLAXO SMITH KLINE (INDIA) 4.08
4 PIRAMAL HEALTH CARE 3.37
55
5 ZYDUS CADILA 3.08
OTHERS 79.03
(AS YEAR ENDING ON 31ST MARCH,2008.WIKIPEDIA.COM)
Figure: 4.7 Market Share of Ranbaxy.
56
The above graph indicates the market share of Ranbaxy in India that has a market share
of 5.12% which makes Ranbaxy a market leader in terms of pharmaceutical sector in
India.
This indicates the competitive advantage of the company in respect to the market share.
CHAPTER – 5
57
FINDINGS &
SUGGESTIONS
58
[5] - FINDINGS AND SUGGESTIONS
5.1 - FINDINGS
The main findings of this project are
• Before acquisition the Singh had 34.82% of the holding in Ranbaxy. After the
acquisition the singh and his family’s complete stake in Ranbaxy had been taken over by
Daiichi Sankyo which is 63.92% of total holdings
• Daiichi has spent more amount in terms of percentage when compared to other top
companies in the world. It has spent 16.5% of its total revenue.
• There has been a double fold increase in EPS prior and post acquisition.
• The market share of Ranbaxy in India is 5.12% which is the highest and No. l in India.
5.2 - SUGGESTIONS
General suggestions:
From the above analysis it is found that it is a profitable deal which gives more value to
the share holders. However, it is a dangerous trend for the following reasons.
• Generic industry is based on low prices. Such acquisitions will lead to prices increase
and thus the loss of primary advantage.
59
• Every time Ranbaxy achieved a new landmark abroad, their local consumer base
automatically increased due to increased confidence and pride. This advantage will be
lost.
• All great businesses have an emotional component (Walmart, GE, Welgreen, Siemens,
Daimler Benz, Ferrari etc). It is a driving force and a source of sustained invisible
support. Acquisitions like this one lose that and will face very serious challenge in the
long term.
• In the short term they make money quickly but not for long. We have seen that a big
name built over years goes into oblivion forever. Hope it does not happen to Ranbaxy.
Financial suggestions:
• Though there has been increase in sales the operating profit is not increased in
accordance to sales.
• The Research & Development expenses have been completely ignored from Ranbaxy
point of view.
• The EPS is showing a double fold increase without much of increase in gross profit
which indicates that the reserves & surplus should be made available accordingly.
• The balance sheet of daiichi sankyo indicates that the current liabilities have increased
to 161% when compared to current assests which have decreased by (15.43%).
60
5.3 - CONCLUSION
Ranbaxy laboratories ltd. (which is the no.1 pharmaceutical company in India) acquired
by Daiichi Sankyo Company Ltd.(a Japan’s third largest pharmaceutical company and
also in top 20 pharma company in the world.
It was the biggest acquisition of a domestic pharmaceuticals company
by foreign company. This acquisition provided benefit to both companies. D&S could
enter into the Asian market which is world’s largest pharmaceuticals market. Ranbaxy
got the strategic partner which helped to explore the foreign market and its innovator
facility to accelerate the growth of the company.
We hope this acquisition will prove more beneficial not only D & S
and Ranbaxy but also to the mankind in terms of the new innovative drugs and medicines
for the deadly dieses.
In summary, Daiichi Sankyo’s move to acquire Ranbaxy will enable the company to gain
the best of both worlds without investing heavily into the generic business. The patent
Perspective of the merger clearly indicates the intentions of both companies in filling the
respective void spaces of the other and emerge as a global leader in the pharmaceutical
industry. Furthermore, Daiichi Sankyo’s portfolio will be broadened to include steroids
and other technologies such as sieving methods, and a host of therapeutic segments such
as antiasthmatics, anti-retrovirals, and impotency and anti-malarial drugs, to name a few.
Above all, Daiichi Sankyo will now have access to Ranbaxy's entire range of 153
61
therapeutic drugs across 17 diverse therapeutic indications. Additional NDAs from the
US FDA on antihistaminics and anti-diabetics is an added advantage.
Through the deal, Ranbaxy has become part of a Japanese corporate framework, which is
extremely reputed in the corporate world. As a generics player, Ranbaxy is very well
placed in both India and abroad although its share performance belies its true potential.
Ranbaxy is also an emerging branded drug manufacturer possessing tremendous clout in
terms of strategic alliances with some of the biggest players in the industry. Given
Ranbaxy’s intention to become the largest generics company in Japan, the acquisition
provides the company with a strong platform to consolidate its Japanese generics
business. From one of India's leading drug manufacturers, Ranbaxy can leverage the vast
research and development resources of Daiichi Sankyo to become a strong force to
contend with in the global pharmaceutical sector. A smooth entry into the Japanese
market and access to widespread technologies including, plant, horticulture, veterinary
treatment and cosmetic products are some things Ranbaxy can look forward as main
benefits from the deal.
However, the recent ban on the US imports of more than 30 Ranbaxy drugs is a major
pain point for the company now. While Daiichi Sankyo has stressed that it going ahead
with the deal, it raises some concerns over the impending benefits and has in fact already
affected.
Ranbaxy’s share performance in September 2008. Post the deal, Ranbaxy’s debt will be
significantly reduced and will impart more flexibility to pursue growth opportunities. The
acquisition corroborates the strong possibility for similar moves in the future, particularly
from Japanese players who have begun displaying confidence in Indian patent laws and
respect for intellectual property rights.
62
CHAPTER – 6BIBILOGRAPHY
63
[6] - BIBLIOGRAPHY
Books:
• Mergers & Acquisitions ICFAI Study Material
• Mergers, Acquisitions & Alliances Vol. II
• Financial Strategies
Internet:
• www.wikipedia.com
• www.associatedcontent.com
• www.ebook.com
64
CHAPTER – 7
ANNEXURE
65
ANNEXURE
Annual results in details (in crores)
Table: 7.1 Annual results of Ranbaxy in detail.
Dec ' 09 Dec ' 08 Dec ' 07 Dec ' 06 Dec ' 05
Other income 276.39 91.26 439.70 79.57 209.66
Stock adjustment -35.26 -180.92 -40.66 -48.65 -30.96
Raw material 1,602.08 1,548.90 1,513.34 1,657.24 1,535.85
Power and fuel - - - - -
Employee expenses 728.40 480.07 421.61 342.28 301.65
Excise - - 44.69 48.15 82.00
Admin and selling expenses - - - - -
Research and development
expenses- 422.58 413.94 382.82 486.36
Expenses capitalised - - - - -
Other expenses 1,663.65 1,984.15 1,171.49 1,032.27 1,049.47
Provisions made - - - - -
Depreciation 148.20 125.39 118.73 111.76 101.33
Taxation 489.93 -594.37 156.69 60.11 -22.34
Net profit / loss 571.98 -1,032.33 617.72 386.45 223.70
Extra ordinary item - -938.92 - -22.60 53.68
Prior year adjustments - - - - -
Equity capital 210.21 210.19 186.54 186.34 186.22
Equity dividend rate - - - - -
Agg.of non-prom. shares (Lacs) 1462.05 1444.31 2323.26 2243.20 -
Agg.of non promotoHolding (%) 34.78 34.36 62.27 60.19 -
OPM (%) 17.23 5.33 13.43 14.08 1.88
66
DAIICHI SANKYO COMPANY LTD. (Consolidated Balance Sheets, 2008 & 2009)
(millions of yen)
Table: 7.2 Consolidated Balance Sheets of Daiichi Sankyo Co. Ltd.
ASSETS: As of March 31, 08 As of March 31, 09
Current Assets:
Cash and time deposits 47,335 76,551
Trade notes and accounts receivable 166,980 195,512
Marketable securities 526,805 235,475
Inventories 98,158 -
Merchandise and finished goods - 93,502
Work in process - 14,496
Raw materials and supplies - 31,447
Deferred tax assets 52,677 76,747
Allowance for doubtful accounts (293) (1,018)
Total current assets 926,524 783,506
Non-current assets:
Property, plant and equipment 136,821 132,732
Land 33,116 42,358
Machinery, equipment and vehicles 33,150 42,358
Construction in progress 2,397 13,315
Other, net 15,239 15,669
Net property, plant and equipment 221,266 250,113
Intangible assets:
Goodwill, net 15,403 77,380
Other intangible assets, net 75,667 115,180
Total intangible assets 91,070 192,560
67
Investments and other assets:
Investment securities 216,038 153,727
Long-term loans 1,304 614
Prepaid pension costs 8,023 6,920
Deferred tax assets 5,995 91,600
Other 18,018 15,864
Allowance for doubtful accounts (352) (309)
Total investments and other assets 249,028 268,418
Total non-current assets 561,364 711,093
Total assets 1,487,888 1,494,599
(millions of yen)
LIABILITIES As of March 31, 08 As of March 31, 09
Current liabilities 46,405 59,419
Trade notes and accounts payable 68 264,345
Short-term bank loans 18,682 8,243
Income taxes payable 754 589
Allowance for sales rebates 776 2,666
Allowance for contingent losses 226 -
Other current liabilities 127,599 173,271
Total current liabilities (a) 194,514 508,535
Long-term liabilities
Convertible bond-type bonds
Rights to shares - 47,082
Long-term debt 18 15,852
Deferred tax liabilities 26,724 5,427
Accrued employees retirement benefits 6,781 10,589
68
Accrued directors retirement benefits 115 177
Provision for environmental measures 1,057 92
Other long-term liabilities 14,165 18,224
Total long-term liabilities (b) 48,862 97,447
Total liabilities (a*b) 243,376 605,982
NET ASSETS
Shareholders equity
Common stock 50,000 50,000
Capital surplus 179,863 105,194
Retained earnings 1,025,144 753,820
Treasury stock at cost (43,407) (14,555)
Total shareholders equity 1,211,600 894,459
Valuation and translation adjustments
Net unrealized gain on inv. securities 48,539 19,882
Deferred gains and losses on hedges - 76
Foreign currency translation adj. (16,263) (51,367)
Total valuation and translation adj. 32,276 (31,408)
Minority interests 377 23,175
Total net assets 1,244,512 888,617
Total liabilities and net assets 1,487,888 1,494,599
69
top related