The Hindu Business Line : Ranbaxy to bid for Merck's generic biz by Jan-end

Ranbaxy Laboratories Ltd (RLL) has reiterated that it would bid for Merck KGaA's generic global business when the bids open. "Yes, we are keen to bid for the Merck generic business as we see it as a high quality asset. We expect the process to begin sometime end of January this year. It is too premature to offer any further comments at present," said Mr Malvinder Mohan Singh, CEO& MD, RLL.

According to analysts it would be a bold move by the company, which clocked a global sales of about $ 1.2 billion in 2005 and is expected to announce its annual results for 2006 on January 18. During the last year, the company in its ambition to be the number one generic drug maker globally acquired seven companies including Romanian pharma firm Terapia for $324 million, GlaxoSmithKline's generic business in Spain, Mundogen and its unbranded generic business in Italy as well as Ethimed NV in Belgium.

According to Mr Ashish J. Singh, Managing Director, Bain and Company, Merck's generic business may be more than thrice the size of Ranbaxy, but the company has proven that the business of acquisition is one that it knows very well. "Ranbaxy has been eying the German market which is one of the strongest in generics. This will give it a complimentary set of products, greater access to the European market. It would also give it an opportunity to migrate manufacturing to India over a few years, significantly impacting profitability," said Mr Singh.

According to Ranbaxy, the success of such a bid will take it to the third position amongst global generic players. Market leader Teva Pharmaceutical Industries Ltd and Sandoz, the generic arm of Novartis, are also believed to be interested in Merck's generic business.

However, it is private equity players who may be Ranbaxy's biggest contenders for Merck's generic business as was the case in Ranbaxy's bid of 3M's generic business, warned Mr Jaswinder S. Chadha, Global President and CEO, marketRx, a US based sales and marketing solutions provider to pharma and biotech companies. "If you look at most of the businesses bought out last year, a great deal were acquired by private equity players," said Mr Chadha.

Generic biz

According to him, Merck's generic business is not comparable to that of Sandoz, and the $5-billion estimate for it may be a lot for Ranbaxy to absorb. However, he stressed, "that does not mean Ranbaxy can't do it."

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