ranbaxy sellout - a case study

7/29/2019 Ranbaxy Sellout - A Case Study

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Started by Ranjit Singh and Gurbax Singh- the nameRanbaxy is a fusion of original promoters, then Bhai Mohan

Singh took over RanbaxyRanbaxy started out as a distributor of medicine and turned

into an MNC by getting over 80% of its business fromoutside the country.

1969 its started its journey as an Indian pharmaceuticalcompany into generic drugs ;it launched the productCalmpose which was Indias answer to Roches Valium

Ranbaxy Sellout- A Preview


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Ranbaxy Laboratories Ltd went public in 1973 and sleepingpill Calmpose catapulted the company into big league

In 1982, Parvinder Singh became the MD; however , BMS andParvinder Singh had a row over expansion and strategy &planning which let to the ousting of BMS from the companyin 1999

Irrespective of their difference, both Father & son took fulladvantage of the opportunities presented; neither sparedany efforts to get the company where they wanted it



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In 2006, Malvinder Mohan Singh, took control of the

company by becoming the MD and CEO and in anunexpected and stunning move the company sold itsmajority stake of more than 50% to the Japanese firm DaiichiSankyo

Also, Daiichi would make an open offer for an additional 20% stake in Ranbaxy at a price of 737 per share, whichrepresents a premium of over 50% on the average price overthe last 3 months.



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Post acquisition, Ranbaxy would become a debt- free firm

with a cash surplus of around 2,800 croresMalvinder Singh will continue as CEO and MD and the

company will retain its name. Malvinder Singh would alsoassume the position of Chairman of Board upon the dealsclosure

The Singh family would net in about 10,000 crores by sellingtheir stake.



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Analyze the Ranbaxy sellout in context of Globalization.

Do you support the above deal of Ranbaxy. State Reasons.

List some of the factors that are attracting GlobalPharmaceutical companies to India?

Points to Ponder


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A generic drug is a pharmaceutical product, usually intended to be

interchangeable with an innovator product, that is manufacturedwithout a licence from the innovator company and marketed after

the expiry date of the patent or other exclusive rights. Generic drugs are marketed under a non-proprietary or approved

name rather than a proprietary or brand name.

Generic drugs are frequently as effective as, but much cheaper than,

brand-name drugs. For example, paracetamol is a chemicalingredient found in a number of brand-name painkillers, but is alsosold as a generic drug (not under a brand name).

Because of their low price, generic drugs are often the onlymedicines that the poorest can access.

Terms


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Drug patenting allows pharmaceutical companies to

legally protect, patent, the components of the drugs

they create in their research labs.Drugs that are patented are protected from

competition, as other companies cannot use the samemixture of ingredients to create competing drugs.Patents last for 20 years.

Dugs worth $90bn are going off patent in the nearfuture.


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India is certainly losing hold over its traditional Pharma

industry, just as old players of the game with substantial size

are calling quits and monetizing their decades old genericsmodel.

In the Daiichi-Ranbaxy deal, the Japanese company benefitedfrom Ranbaxys low-cost manufacturing infrastructure and itsstrong supply chain, even as Ranbaxy gained access to DaiichiSankyos R&D expertise to advance its branded drugsbusiness.

Analyze the Ranbaxy sellout in context of

Globalization.


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An analysis shows that several mid-size companies are

vulnerable to takeovers. Ankur Drugs, Avon Organics, Lyka

Laboratories, Strides Arcolab, Surya Pharmaceuticals andVenus Remedies top the list of pharmaceutical companies inwhich the promoters have less than a 25% stake.

But I can't help feeling a twinge of regret about an IndianMNC becoming a Japanese subsidiary," Mahindra &Mahindra chairman Anand Mahindra told The EconomicTimes.

Analyze the Ranbaxy sellout in context of

Globalization.

ranbaxy sellout - a case study

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