Pfizer Inc., the world's largest drugmaker, may make a hostile bid for Ranbaxy Laboratories Ltd., countering an agreed takeover by Daiichi Sankyo Co., the Business Standard said, citing people familiar with the matter.
Pfizer, based in New York, may offer to buy the 65 percent of Ranbaxy that's not held by the founding Singh family, the paper said. Daiichi Sankyo Co. agreed on June 11 to pay as much as $4.6 billion for Ranbaxy to enter the generic-drug market where sales are growing twice as fast as branded medicines. Pfizer's India unit and Daiichi declined to comment.
A battle for Ranbaxy, India's biggest drugmaker, may bolster shares of a company that have lagged behind the benchmark index for the past three years. Ranbaxy has waged a costly legal battle with Pfizer in the U.S. and Europe over the right to sell cheap copies of blockbuster drugs led by cholesterol treatment Lipitor.
`An offer can be made, but without the concurrence of the promoters it is difficult for such a bid to succeed in the Indian context,'' said A. K. Sridhar, chief executive officer at UTI International (Singapore) Pvt. “Usually institutions look at the long term before deciding one way or the other.''
Daiichi Sankyo extended declines after the newspaper report, falling as much as 4.4 percent to 2,850 yen on the Tokyo Stock Exchange. Ranbaxy gained 2.6 percent, the biggest rise on the Sensitive Index, to 558.35 rupees at 10:00 a.m. in Mumbai.
“The deal with Daiichi is binding and sealed,'' Krishnan Ramalingam, spokesman for Ranbaxy, said on his cell-phone. “We can't make any other comment.''
Generic Market
Daiichi Sankyo, based in Tokyo, wants to buy Ranbaxy to break into the top 10 companies in the $120 billion generic- pharmaceutical market, which grew 11 percent last year, compared with 6 percent for all drugs.
Daiichi, Japan's third-largest drugmaker, agreed to buy the entire 34.8 percent held by Ranbaxy's billionaire Chief Executive Officer Malvinder Singh and his family and a portion of about $1 billion of preferential stock Ranbaxy will issue. The sale will trigger a mandatory offer for 20 percent more from shareholders under Indian takeover rules.
“We are not aware of such action and can't comment on speculation,'' said Daiichi Sankyo spokesman Yasuki Minobe.
Any counter offer for Ranbaxy may have to beat the 737 rupees a share that Daiichi Sankyo is offering to pay shareholders for the stake, a 35 percent premium to Ranbaxy's current market price of 544 rupees.
Previous Talks
Pfizer, which negotiated with Ranbaxy's founders about a year ago for their holding in the company, may make an offer to purchase 41.3 percent of the company from institutions and 21.2 percent from individual shareholders, the newspaper said.
“I can't comment on the matter,'' Kewal Handa, the managing director of Pfizer Ltd., the Indian unit of Pfizer, said by telephone. “We don't comment on market speculation.''
Ranbaxy is trying to win the right to sell a version of Pfizer's best-selling Lipitor treatment before the patent expires in 2010. On April 30, New York-based Pfizer said the U.S. Patent & Trademark Office will confirm the basic patent for its cholesterol medication, rejecting Ranbaxy's challenge.
Source: Bloomberg