Pfizer’s reported plan to bid for Ranbaxy’s stake has raised a number of eyebrows in the pharma industry. The industryis still confused over why Pfizer should buy Ranbaxy’s remaining stake for an amount, which will be higher than what did offer by Japanese firm, Daiichi.
The only satisfactory answer is that of Pfizer’s necessity to thwart Ranbaxy from launching the generic version of its $13 billion cholesterol drug in the global markets before its patent expiry in March 2010.
Interestingly, Ranbaxy and Pfizer shares went up 4.31 and 4.76 % on the BSE on Friday following news report of Pfizer’s bid for Ranbaxy. The shares of Ranbaxy and Pfizer India touched intraday high of 5.6% and 17.4%, respectively.
Ranbaxy has been a major threat to Pfizer as far as Lipitor, the largest selling drug in the world, is concerned as the Indian firm has filed applications in as many as 18 countries seeking the marketing approval for Lipitor.
A number of cases are being heard in various US courts, following Ranbaxy’s paragraph IV abbreviated new drug application for Lipitor marketing approval challenging its validity.
However, some analysts have a different view. According to Shivani Shukla of Frost & Sullivan, “It would be a logical conclusion to make that more pharma MNCs would now be interested to come into the Indian market through acquisitions.”
But a counter bid for Ranbaxy would mean that it will have to shell out quite a tidy sum, with which it can make some new buys from pharma companies which are prepared to sell. Also, Pfizer would not want to buy Ranbaxy just to take care of the litigations filed by theIndian company on Lipitor. Litigations are an essential part of the pharma business now, and that alone cannot be a reason for buying out a company.
An analyst with a foreign firm opines that the advantages that Pfizer can reap from Ranbaxy buyout are minimal. ”
Ranbaxy has a potential drug pipeline in R&D, Pfizer would have benefited by the buyout as it can boost up their drying pipeline. Also Pfizer has its generic arm, Greenstone, which helps it to launch all its off patented drugs in the markets.”
Despite Ranbaxy has a drug pipeline of 10-12 molecules, only a single molecule has entered into phase II trials.
A Mumbai-based investment banker said, “Daiichi’s Ranbaxy buyout was the right one as it will definitely help the firm establish itself across the globe wherever Ranbaxy has presence.
On the other hand, Pfizer, which wanted to enhance their drug development business, will have to target R&D focused companies rather than a genericplayer like Ranbaxy.” However, bringing the offer without promoters’ consent seemed to be difficult in the Indian context, he added. Moreover, Ranbaxy has been saying that they have sealed the deal with Daiichi Sankyo.