Sun-Ranbaxy merger: Set for a return to Indian hands

What would Ranbaxy’s founder and former Chairman , the late Parvinder Singh, have said if he saw Ranbaxy being sold for the second time in six years?

It wouldn’t have come to such a pass, is the quick reply from an old hand who had worked with the dream-team that built Ranbaxy and made it the poster boy of the Indian pharmaceutical industry.

When Ranbaxy’s erstwhile promoter-family, the Singh brothers — Malvinder and Shivinder — sold their entire stake to Japan’s Daiichi Sankyo for about $4 billion in 2008, there were some who rued the loss of a good home-spun company to a foreign owner.

But there were others who believed that it would take Ranbaxy into an international orbit, making generically-similar medicines with the innovative edge of the Japanese company.

That was not to be, however. Ranbaxy is now set to come back into Indian hands. As Sun looks to acquire Ranbaxy in a $4-billion transaction, there are those who are happy that Ranbaxy has landed safely in Sun’s hands. But there are others who wonder if it will remain a pure-play generic drugmaker without the edge of innovations.

So, what is it that gives Sun Pharma so much confidence in Ranbaxy? A top Sun executive explained: “We get excited and depressed by headlines, but what sells at the core of it is medicine. So, though the picture of the company is largely negative, the company’s revenues are steady. There are some inherent strengths that are under-appreciated and under-exploited.”

While Sun will have to put its time, money and energy into setting things right, the fact remains that Ranbaxy’s presence in India and emerging markets, its portfolio of first-to-file products in the US, and its over-the-counter brands such as Revital, make it a good buy for Sun, the executive said.

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