19. Entry into non-proprietary drugs for Daiichi-Sankyo (Product Extension). To develop new drugs to fill the gaps and take advantage of Ranbaxy’s strong areas.
20. Realization of sustainable growth through a complementary business model. To overcome its current challenges in cost structure and supply chain.
21. Acceleration of innovation drug creation by optimizing value chain efficiency.
22. The acquisition of Ranbaxy by Daichi represents a major entry for the Japanese firm into the high growth business areas of generic drug. The acquisition shows that global pharma companies are making efforts to cope up with strong generic drug makers.
26. The deal was financed through a mix of bank debt facilities and existing cash resources of Daiichi Sankyo.
27.
28. Contd… Ranbaxy Co Ltd Religare Capital Markets Limited, a wholly owned subsidiary of Religare Enterprises Limited, is the exclusive financial advisor to Ranbaxy and the Singh family. Vaish Associates are the legal advisors to Ranbaxy and the Singh family
31. Ranbaxy geographically diversified presence across the globe will enable it to provide a wider reach to Daiichi Sankyo' product portfolio, including India.
32.
33. Ranbaxy bypassed a lot of European and U.S. companies that were finding it difficult to enter the Japanese market, where safety and testing requirements are a lot higher.
34. This deal made the amalgamated company to be the 15th largest pharma company in the world. The below equation solves for the minimum required synergy:
35.
36. It made an open offer to the Ranbaxy shareholders for another 20%
58. Daiichi Sankyo paid about 4.7x Ranbaxy’s sales for the acquisition, as against2.7x paid by Mylan for Merck KGaA’s generic unit at a price of for $7.6 billion in 2007.
59. The high valuation was due to Ranbaxy’s strong infrastructure, presence across geographies, a robust product pipeline, including upsides from the settlements.
64. The balance sheet of Daiichi Sankyo indicated that the current liabilities had increased to 161% when compared to current assets which had decreased by (15.43%).
65.
66. Lack of proper due diligence. Daiichi, in its eagerness to tap the expertise of a generic drug maker, took the risk of buying Ranbaxy for top dollar.
67.
68.
69. Daiichi’s lack of understanding of generic business in the valuation paid for acquiring Ranbaxy.
70. Inadequate due diligence done considering the size, scale and scope of the deal.
71. Should have estimated the full extent of the legal risk arising out of the US FDA letters,
72. In May 2009, Daiichi-Sankyo announced a one-time write-down of $3.45 billion of Goodwill.
75. Daiichi was already holding equity stake in Uni-Sankyo Limited, a company engaged in ‘same’ business as Ranbaxy, prior approval of FIPB was obtained.
78. Corporate Law Issues Involved Nomination of Independent Director as per the Agreement, post completion The board of directors of Ranbaxy would consist of 10 directors, in a combination of 4 independent and non-independent directors will be nominated by the Promoters 6 independent and non-independent directors will be nominated by Daiichi.
87. Indian companies have superior biotech and drug synthesis skills, high quality and vertically integrated manufacturing assets, differentiated business models
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