Ranbaxy Laboratories Ltd is eyeing German multinational Merck KGaA's $2.3-billion generic drug business. A deal will make the company the third largest generic drug manufacturer in the world, with combined sales of $4 billion.
"We find this an attractive option. Merck is the third or fourth largest generic company in the world. An acquisition, though it is too early to predict, could help Ranbaxy strengthen its presence across key global markets. We will be one of the bidders," Malvinder Mohan Singh, Ranbaxy's chairman & managing director, told Business Standard.
Ranbaxy hopes to be in the fray by January-end. The company is open to partnering private equity investors for raising the required money.
The German company had announced last week that it was considering the sale of its generics division (Merck Generics) to raise resources for the acquisition of Swiss drug-maker Serono. With Merck insisting that it had not begun concrete talks with any potential bidder, Ranbaxy may enter the race at an early stage.
Merck Generics has sales in more than 90 countries and accounts for the third largest generics business in the world. The division employs approximately 5,000 people world-wide.
The Merck move is in line with the growing trend of multinationals getting out of the generics business, which faces declining profit margins. A manufacturing base with a good organisational back-up in a highly regulated market is well thought of by Indian generic majors like Ranbaxy and Dr Reddy's Laboratories.
Indian companies that enjoy vertical integration due to their presence in the bulk drug manufacturing segment find acquisition of generic manufacturing units on foreign soil an attractive option.
Ranbaxy Laboratories had acquired Be-Lab (South Africa), Ethimed NV (Belgium), Therapi (Romania) and the unbranded generic business of GlaxoSmithKline (GSK) in Germany and the Mundogen generic business of GSK in Spain in 2006. The company had funded the acquisitions through foreign currency convertible bonds (FCCBs) of $400 million.
Another major acquisition last year was of Betapharm Arzneimittel GmbH, the fourth-largest German generic drugmaker, by Dr Reddy's for $624.3 million.
Shopping Abroad
- Ranbaxy's acquisitions in 2006
- Be-Lab (South Africa)
- Ethimed NV (Belgium)
- Therapi (Romania)
- The unbranded generic business of GlaxoSmithKline in Germany
- The Mundogen generic business of GSK in Spain
