Ranbaxy,Aftershocks-,Indian,Dr business, insurance Ranbaxy Aftershocks- Indian Drug Makers Is Up For Grabs
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Pharmaceuticalpowerhouse of Japan Daiichi Sankyo's acquisition of Ranbaxy Laboratories, India's largestdrug company is likely to have a domino effect on mergers and acquisitions ofIndian pharmaceutical companies. The business model which brought mega bucks tothe kitty of Ranbaxy would influence other firms in the industry to followsuit. Ranbaxy isone of the few Indian firms that have made a global footprint in generic drugs.Yet their decision to give up the controlling stake to another multi-nationalcompany indicates doing business in India with existing norms is toughand less lucrative. Although Indiamanufactured drugs at roughly eighth of global cost, the Indian governmentpersistently moved with policies to control the prices. Some industry expertsaverred, the price controls to a certain extent has made Indian pharmacybusiness less attractive. On thecontrary, Hasit Joshipura, Managing Director of GlaxoSmithKline opined, theMylan-Matrix deal and now Ranbaxy deal confirm that global pharmacy companiesare looking at Indiafrom another angle per se, recognizing the country as a key pharmacydestination. The global pharmacy players would be keen on investing in India either bysetting up their fully-owned entities, or by deals of strategic alliances oracquisitions. India has become more attractive in the eyes of bigpharmacy companies in the world owing to India's ability to manufacturedrugs at very low cost and availability of quality English speaking scientificpersonnel with required skills. Whereas, pharmacy majors have to live up withrising manufacturing cost at home which has forced them to seek other viablelocations such as Indiafor maintaining momentum in their businesses. ViceChairman and Managing Director of Novartis India Ranjit Shahani stated Indiangeneric players with established global businesses had definitely been a targetfor multi-national companies to beef up their businesses. The coming monthswould transform the pharmacy industry of India with more of such deals,predicted Shahani. When Indiaintroduced product patent regime in 2005, Indian drug companies had to swallowthe bitter pill that prevented them from bringing out generic versions ofpatented drugs. The drug discovery process as well as drug development processinvolved billions of dollars and this hampered Indian companies to pursue anysuch processes in a highly competitive global generic market. There are manybig names of Indian drug industry including Aurobindo Pharma, Cipla, and OrchidChemicals and Pharmaceuticals have been targets for multi-national companiesfor sometime. Higher valuations by these companies have deferred them beingacquired so far. MalvinderMohan Singh, CEO & MD of Ranbaxy himself believes the business model whichhe shares with Daiichi Sankyo would be replicated by many other companies,small and big in the industry. CEO & MD of Glenmark Glen Saldanha agreedthat especially small players would be forced out from business, and only thefundamentally strong businesses could be able to remain in generic business infuture. Thoughmany industrialists felt anguish over Ranbaxy's sale, however they added,gaining good profit in the process should be looked upon than other aspects ina highly competitive pharmacy business. Many global drug majors sans generic drugs in their portfolio andseveral problems encountered by Indian pharmacy companies combined will createa perfect backdrop to redefine $50 billion Indian pharmacy business in the nearfuture.
Ranbaxy,Aftershocks-,Indian,Dr