Date:12/06/2008 URL: http://www.thehindubusinessline.com/2008/06/12/stories/2008061251230300.htm

Takeover takes industry by surprise

Mr Yusuf Hamied

P.T. Jyothi Datta

Mumbai, June 11 It is quite dramatic, is what Cipla’s Chairman and Managing Director, Dr Yusuf K. Hamied, said from Spain, reacting to Ranbaxy’s decision to allow Japanese drug-maker Daiichi Sankyo to pick up majority stake in it.

Cipla has been at the centre of market speculation, with the grapevine claiming that Israeli company Teva, and later Mukesh Ambani’s Reliance were interested in acquiring Cipla. A rumour categorically quashed by Dr Hamied at the company’s shareholder meeting last August.

Shockwaves

Nevertheless, market-watchers kept a watch on drug companies that seemed to be vulnerable to predatory overtures, and somehow, Ranbaxy seemed to slip through the crack. So on Wednesday, when Ranbaxy said that its promoters were selling their entire stake to Daiichi Sankyo, who would hold 51 per cent in the Indian company – it sent shockwaves through the industry.

Unexpected

Mr Ajay Piramal

Obviously, global companies are finding it difficult to grow the topline, and in the domestic market too, the environment is difficult, said Piramal Healthcare Chairman, Mr Ajay Piramal, speaking to Business Line from France.

Admitting that he did not expect such a development from Ranbaxy, he added, that the transaction would bring in good value for shareholders. More promoters would be inclined to revisit proposals fro stake sale, he said. At Piramal Healthcare, the management was focused on growing the business, and its custom manufacturing is one such growth-driver, he said, brushing aside a question on whether they would do a Ranbaxy, given the right offer.

Mr Glenn Saldanha

Glenmark’s Managing Director and Chief Executive Officer, Mr Glenn Saldanha, speaking from New York pointed out that Indian companies will have to ask themselves if they have strategies to sustain their performance in future. “We have a robust business model for generics and new chemical entities,” he said, with “absolutely no interest” in selling out.

Indian companies will get unsolicited proposals from investment bankers, who will think that everyone is saleable, observed Mr D.G. Shah, of the Indian Pharmaceutical Alliance (IPA). The IPA, a platform for domestic pharmaceutical companies, was the brainchild of Ranbaxy-promoter, the late Dr Parvinder Singh. The desirable part of the Daiichi-Ranbaxy deal is that it would act as a catalyst for domestic consolidation, he added.