#2. Dr Reddy's Laboratories
Dr Reddy's Labs, with a 2007 turnover of Rs 4,162.25 crore (Rs 41.622 billion), is India's second largest drug firm by sales.
What the Ranbaxy sale means
Business research and consulting firm Frost & Sullivan says that from Ranbaxy's point of view, as an exit option it makes sense for the promoters to sell to a well reputed and established company such as Daiichi Sankyo.
Shivani Shukla Raval, industry manager, healthcare practice, Frost & Sullivan, South Asia & Middle East, said that Daiichi is a leading, research-based pharmaceutical company and this deal would enable Ranbaxy to explore their shared capabilities in drug development as well manufacturing and ensure further global reach. Together with the combined resource pool the company would be a strong contender in both the generic as well as innovator space. And it would enable Ranbaxy to be a truly research based pharmaceutical company.
For the buyer, said Raval, it makes sound business sense in terms of Ranbaxy's current market standing. Ranbaxy is amongst the top 10 generic manufacturers in the world, with diverse business models in the pharma space. Given the company's presence in the global market, its market share, the size of its business operations and the penetration in the domestic market in terms of market share, growth and infrastructure it is a lucrative deal for any investor. The investing company shall then be amongst the largest generic manufacturers globally in terms of market share.
For the investor, Raval added, as well as the seller it would mean a complementary business amalgamation that spans the entire spectrum of the pharma business in terms of:
Global reach covering developed and lesser regulated emerging markets: the new entity would attain a leading market position in these markets with both innovator generic product offerings;
Strong growth potential: by effectively managing opportunities across the full pharmaceutical value chain;
Cost competitiveness: by optimizing usage of R&D and manufacturing facilities of both companies, especially in India as the country offers excellent cost effectiveness in both R&D and manufacturing.
Image: The Dr Reddy's Laboratories’ Hyderabad facility. (Inset) Dr Kallam Anji Reddy, chairman, Dr Reddy's Labs. | Photograph, courtesy: Dr Reddy’s
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