India?s largest drugmaker by sales, Ranbaxy Labs, is in race with the Chinese telecom equipment-maker ZTE to acquire Nokia?s factory in Romania, which stands on the verge of shutting down.
Ranbaxy?s interest in the East European country emanates from its plans to ramp up production in Romania so that it can be utilised as a strong base to export generic drugs, not only to countries in the CIS region, but also the entire EU.
While Terapia Ranbaxy’s (a subsidiary of the India-based drugmaker) major interest in the deal centres around the real estate of Nokia’s facility, the manufacturing equipment in the unit may prove to be particulary useful to ZTE, which is on an expansion spree and has announced its plan to set up an assembly line for smartphones in Romania by first half of 2012.
?It is logical and expected that Ranbaxy would aim to enhance its capacity in Romania, which the company sees as a manufacturing hub for all its EU markets,? said Hemant Bakhru of brokerage firm CLSA. Terapia is already one of the largest generic drug producers of Romania, in which Ranbaxy bought a 96.7% stake in 2006 for $324 million.
It remained Ranbaxy’s largest acquisition till the Gurgaon-based firm itself got acquired by the third largest Japanese drugmaker, Daiichi Sankyo, in 2008. Terapia, the largest drug exporter of Romania, which specialises in drugs belonging to chronic disease verticals, such as cardiovascular, central neuro system and muscular and skeletal therapies, posted an annual turnover of R532 crore and a net profit of R106 crore in 2010.
A Ranbaxy spokesperson refused to comment on the matter.
Romania, the sixth largest pharma market in East Europe, recorded combined drug sales worth $3.76 billion (at consumer prices) in 2010, which includes prescription drugs and OTC medicines, sold through pharmacies and hospitals, according to Business Monitor International. The drug market grew by 12.1% (in US dollar terms) in 2010. Ranbaxy’s revenues from Europe stood at $272 million in 2010, flat since the year before when it clocked sales of $269 million. It accounted for 14.5% of the company’s consolidated sales. In CIS region, however, the company posted a year-on-year growth of 18% in 2010 and its sales stood at $101 million, contributing 5% to its consolidated revenue kitty.
Local Romanian reports quote a representative of Cluj Country Council, a local public administration authority, saying that Nokia would take a final call on the matter soon. Nokia plans to shut its Romanian factory by the year end, which according to local reports would result in loss of over 2,000 jobs.