The Hindu Business Line : Ranbaxy shares up on buzz of Pfizer interest

Could Pfizer’s interest in holding onto its block-buster cholesterol drug Lipitor drive the US-based drug major to make counter predatory moves on Ranbaxy? And this, just days after Ranbaxy’s promoter family sold out its entire stake to Japanese drug company Daiichi Sankyo?

Responding to the market buzz on Pfizer’s possible counter offer to Ranbaxy’s share-holders, a Pfizer Inc spokesperson told Business Line: “Our response is that we do not comment on market rumours and speculation.”

Ranbaxy too did not want to comment on speculation, and news agencies quote the Ranbaxy Chief Executive, Mr Malvinder Singh, in Tokyo, as having said that Daiichi Sankyo and Ranbaxy have a “firm and binding agreement”. Overseas news reports also quote Daiichi as not wanting to comment on the market information. Despite the absence of confirmation, Ranbaxy’s shares were buoyed by the buzz, closing at Rs 566.90 on the BSE, up 4.31 per cent on Friday.

Pharma-industry veterans argue both ways. Pfizer may want to do a Warner Lambert on Ranbaxy, given that Pfizer and Ranbaxy were battling in several countries over Lipitor, whose patents begin to expire in a couple of years. In fact, history proves Pfizer has been aggressive, as seen in the acquisition of Warner Lambert to get Lipitor into its kitty, said a pharma industry representative. Though such overtures were made a year ago, it was unlikely that Pfizer would get into a messy situation post Daiichi’s involvement now, he added.

Mr D.S. Brar, Former Chief Executive Officer of Ranbaxy and Chairman of GVK Biosciences, told Business Line a new hybrid model was emerging, where innovative companies were looking at generic arms and vice-versa, an example being Novartis and its generic arm Sandoz. Daiichi Sankyo’s interest in Ranbaxy too is on similar lines, and if Pfizer was interested, it could be to beef up its generic strength. However, he added, he had not heard of a counter offer by Pfizer.

It is highly improbable that Pfizer would make a counter offer for Ranbaxy at a time they are battling on Lipitor, said Mr Sanjiv Kaul of ChrysCapital, adding that such a move could put Pfizer in trouble with the Federal Trade Commission. “To the best of my knowledge, it is being floated by vested interests to rig the Ranbaxy share price,” he added.

If Pfizer was indeed interested, it would have got into the picture before the Daiichi Sankyo deal was sealed earlier this week, unless Pfizer wants to create trouble for Ranbaxy because of the battle over Lipitor, another industry-hand said.

On Wednesday, Daiichi Sankyo had formalized a $4.6-billion deal to pick up 51 per cent in Ranbaxy, at Rs 737 per share. As per the deal, Daiichi was to acquire 34.8 per cent stake (28 per cent post equity-capital dilution) held by promoter Mr Malvinder Singh and family, 9.5 per cent through preferential allotment of equity shares and another 4.5 per cent through share warrants to be issued on a preferential basis. The company is to also make an open offer to Ranbaxy's shareholders for acquiring another 20 per cent.

With 15.84 per cent in Ranbaxy, Life Insurance Corporation of India could hold the key if fresh predatory moves were being made. However, an LIC official did not want to comment on market speculation.