Why The Sale Of Ranbaxy Is A Good Thing

Aditya Rao

Global Pharma and Ranbaxy DealIt was by no means the easiest decision for Malvinder Singh, the CEO of Ranbaxy laboratories to sell his stake to a Japanese company. After all this was the company started by his family years ago and made into one of the biggest Pharma companies in the world.

But at the end of the day, it was probably the right thing to do. For quite some time now Ranbaxy’s stock has been deteriorating. The competition in the pharma sector has been intense and Ranbaxy has not been able to develop any new or revolutionary drugs. Though they have been making profits their ability to expand worldwide has been slow.

Which is why their decision to sell the company to the Japanese firm Daiichi Sankyo is a good one.Daiichi has a good presence not only in Asia but the world over. They are a recently established consortium of smaller pharmaceutical companies which produce very successful drugs. By collaborating with Ranbaxy Daiichi will have a larger manufacturing capacity and Ranbaxy will get a wider worldwide presence.

This is more of a partnership even if a sale was made.

Daiichi has made it very clear that it will continue to operate in India under the Ranbaxy name. In fact the entire management of Ranbaxy will be retained which also means that Malvinder Singh will remain the CEO even after the sale is made.

For the investor this is good news especially for those who hold shares of Ranbaxy’s other two franchises Religare and Fortis which will continue to be a part of Malvinder Singh’s fold. The money gained from the deal with Daiichi Sankyo which will be almost 10,000 Crore will be invested into these two companies to try and better them.

Ranbaxy and Daiichi by coming together have now become the world’s fifteenth biggest pharmaceutical firm. Their combined presence has catapulted them into manufacturing drugs in eighty countries worldwide and with Ranbaxy’s amazing arsenal of manufacturing plants backed by Daiichi ’s extensive research and development facilities, the newly formed entity is ready to dominate the pharma sector.

What will however be most heartening for both companies will be the fact that by coming together they will be able to provide a better rounded approach to health care. Their sales will expand into everything from the field of gynecology and cardiology to geriatrics and pediatrics. Something that would have taken a lot longer if they had continued to operate on an individual basis.

By coming together the companies have also been able to create a sizeable Asian identity in the pharma sector. Drugs that needed to be imported can now be manufactured by these two companies itself which translates into cheaper drugs for patients.

It’s being vied as a win-win situation for both Ranbaxy and Daiichi Sankyo.The aim is to provide better and more convenient drugs with fewer side effects all the while trying to do so on a global scale. A difficult decision and a tricky one but the right one in the end for one Malvinder Mohan Singh.