The Hindu Business Line : Ranbaxy hikes stake in Zenotech Lab to 45%

Business Daily from THE HINDU group of publications Thursday, Oct 04, 2007 ePaper

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Ranbaxy hikes stake in Zenotech Lab to 45%

To make open offer at Rs 160 per share

– Kamal Narang

Stake acquisition: Mr Malvinder Mohan Singh (right), CEO and Managing Director, Ranbaxy Laboratories, with Dr Jairam Chigurupati, Managing Director, Zenotech Laboratories Ltd, at a press conference in the Capital on Wednesday.

Our Bureau

New Delhi, Oct. 3 Ranbaxy Laboratories has increased its stake in the Hyderabad-based company Zenotech Laboratories to 45 per cent from the existing seven per cent.

The additional stake comprises purchase of promoters’ shares and a preferential allotment (16 per cent) by Zenotech. Both valued at Rs 160 per share, will cost Ranbaxy Rs 214 crore. Ranbaxy will raise funds for the stake acquisition through a mix of internal accruals and debt.

Zenotech is a speciality generic injectables company with biotech at its core and will bring to Ranbaxy a niche basket of biopharmaceuticals and oncology products.

The acquisition also makes it mandatory for the Gurgaon-based company to make an open offer for an additional 20 per cent to Zenotech’s shareholders as per SEBI guidelines. The open offer will also be at Rs 160 per share or at a SEBI recommended price, said Mr Malvinder Mohan Singh, CEO and Managing Director, Ranbaxy.

“This brings us significant opportunities in two high growth areas, biopharmaceuticals and specialised injectibles, including oncology,” said Mr Singh who estimates the global biopharmaceuticals market at $65 billion.

Zenotech’s pipeline supposedly addresses a third of this market. Ranbaxy is also betting hard on the oncology therapeutic area which it says is worth $35 billion and growing at 20 per cent CAGR.

“The entry barrier to these niche specialised area is very high, both in terms of skills and technology required,” added Mr Singh.

‘No takeover plans’

Ranbaxy has no intentions of taking over the company, said Mr Singh. Post-acquisition and the preferential share expansion, Zenotech’s promoters would hold 25 per cent stake in the expanded equity capital. Mr Jayaram Chigurupati would continue as the company’s Managing Director.

“Competition is fierce in the area. And as a first generation entrepreneur I have taken the company as far as I can. Ranbaxy with its global regulatory expertise, intellectual property strengths and global marketing reach will give us the leverage that our products need,” said Mr Chigurupati.

Ranbaxy with a presence in 49 countries, expects to launch a Zenotech biopharmaceutical product in Europe by late 2010 or early 2011.

Mr Singh said a US launch would have to wait for greater clarity in the US regulatory framework for biosimilars.

Ranbaxy reported significant forex gains in its second quarter this year, ending June 30 from the $440-million FCCBs it had raised.

Declining to comment on the impact of the borrowing for the third quarter, Mr Atul Sobti, Executive Director and COO said that the company had continued to cover and hedge well even as the rupee had appreciated.