Daiichis Acquisition of Ranbaxy

Publication Year : 2009

Industry: Health Care
Region: Global
Abstract:
On June 11th 2008 Japans third largest drug maker Daiichi Sankyo announced, its
strategic deal to acquire majority stake in the Indian generic drug major, Ranbaxy
Laboratories Limited. Daiichi agreed to pay around US$4.2 billion for acquiring 51%
stake (including promoter stake of 34.83%) in Ranbaxy, putting the total enterprise
value of Ranbaxy at US$8.5 billion. Daiichi-Ranbaxy deal was the largest acquisition
in the Indian pharmaceutical industry and was viewed by analysts as a step towards
the consolidation in the world generic drug market. The deal made Daiichi-Ranbaxy,
the combined entity the 15th largest pharmaceutical company in the world with a
market capitalization of around US$30 billion. It helped Daiichi leverage its innovative
drug making capabilities and R&D expertise with Ranbaxys low cost manufacturing
abilities to achieve a competitive position in the world generic drug market. Some
industry experts claimed that the price Daiichi paid for acquisition was quite high
compared to the present pricing of other Indian generic drug making companies.
Pedagogical Objectives:
An in-depth knowledge about DCF valuation techniques

The rationale behind the acquisition of Ranbaxy by Daiichi

Long-term synergies arising for Ranbaxy after Daiichi acquired it

The advantages and disadvantages of M&A deals

The need for growth through acquisitions in foreign countries

The consolidation trends in the Indian and Global Pharma Industries.

Keywords : Mergers and Acquisitions, DCf Valuation, Pharmaceuticals Industries,
Generic Drugs, Synergies, Strategy, Industry value Chain, Daiichi Sankyo, Ranbaxy,
Competitive Anaysis, Open Offer, Financial Forecasting
Contents :
Sankyo Company Limited
Daiichi Pharmaceutical Company
Financing the Deal and Integration
The Spectrum of Activities of Ranbaxy
The Road Ahead
Ranbaxy Consolidated Income Statement
Ranbaxy Consolidated Balance Sheet
Overview of World Generic Market
Indian Pharmaceutical Industry
Market Size and Growth over Last 3 Years
Top 25 Pharmaceutical Companies in the World