Mergers, Acquisitions & Takeovers Case Study

Ranbaxy’s Sell-off to Daiichi – Rise of a New Business Model in Global Pharma?

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Abstract:
The fast-growing emerging markets have gained considerable significance with the Big Pharma losing out on their global market share. India, the growing hub of R&D in global pharma, is fast catching up as an alternative for sustaining competitive advantage. In 2008, the sell-out decision by Ranbaxy, the largest pharmaceutical in India, is seen as a sign of the changing dimensions of faster consolidation in global pharma. Ranbaxy, a generic firm, sold its majority stake to Daiichi-Sankyo, a top Japanese innovation company, setting a new trend. The cross-border acquisition is perceived as a growing tendency of companies to focus on future sustainability than on mere profit margins. Both companies are complimenting each other, with Ranbaxy foregoing national interests for stronger global competitiveness. This hybrid model has triggered a new phase of M&A in global pharma, as Big Pharma start desperate measures of new mutual collaborations and alliances to risk losing their market share from their generic players.

Pedagogical Objectives:

• To examine the changing market dynamics amidst competition to traditional pharma companies from generic drug makers
• To evaluate the value chain of pharma industry and examine the different business models that evolved
• To analyse the growth drivers of pharma companies
• To identify the need for a hybrid business model and analyse the effects of Ranbaxy’s sell-out to Daiichi on both the companies and the industry as a whole.

Keywords : Ranbaxy, International Patent, Daiichi, Business Model, Pharmaceutical, Acquisition, Generic drugs, Research and development, Blockbuster drugs, clinical trials

Contents : 
Global Pharma – Towards Consolidation
Drug Development Cycle
Opportunities for Big Pharma Firms
Emerging Markets’ Share in Global Pharma
Strategic Shift of Traditional Pharmaceuticals
Pharmaceutical Sales in Developed and Emerging Markets
Ranbaxy’s Deal with Daiichi – Hybrid Model for Global Competition
Evolving Policy Changes in Indian Pharmaceuticals