A rumoured counter-bid by Pfizer for Ranbaxy is eerily similar to the US firm’s actions in November 1999 when it launched an aggressive bid to stop Warner-Lambert from being bought by American Home Products.
To acquire Warner-Lambert, Pfizer ended up paying $20 billion more than what American Home Products offered. The jewel in Warner-Lambert’s crown was Lipitor — the cholesterol-fighting drug, in which Ranbaxy is the generic leader. The speculation now is Pfizer will go all out to outbid Daiichi.
On November 4, 1999, hours after executives of the American Home Products and Warner-Lambert announced a $70-billion merger agreement, Pfizer scuppered the deal with a $82.4-billion hostile bid for Warner-Lambert. Though the Warner-Lambert board rejected the bid initially, Pfizer managed to acquire the company for $90 billion.
Cut to today. Soon after Japanese drug maker Daiichi Sankyo announced a deal to buy Ranbaxy promoters’ 35% stake in a multi-billion dollar deal, there were rumours that Pfizer may initiate an aggressive takeover battle to take the control of Ranbaxy. Why would Pfizer want to go after Ranbaxy? The answer is Lipitor, one of Pfizer’s best-selling drugs with global sales of around $10 billion.
The anti-cholesterol drug’s patent is on the verge of expiry in the US and European markets. Ranbaxy has entered into a legal battle with Pfizer to launch the drug in the US and European markets. Though Ranbaxy has not been greatly successful in its legal strategy, industry analysts feel that by acquiring Ranbaxy, Pfizer can control the generic market of Lipitor and the market for other blockbuster generic drugs.
Ranbaxy is scheduled to launch a generic version of Lipitor in the US in less than two years. It had won the right to sell its generic version of Lipitor from US Food and Drug Administration for 180 days from March 2010.
Lipitor, the original research product of Warner-Lambert, was why Pfizer went all out to out-bid American Home Products. Pfizer was co-marketing the drug with Warner before the deal.
Competition has become intense among the world’s largest drug makers to ensure a pipeline of lucrative breakthrough drugs — compounds that are billion-dollar sellers and control a commanding share of the market. Companies also need to replace drugs losing patent protection, which become vulnerable to cheaper generic products.
Source: Economic Times