Description
It explains the M & A in the pharma sector in india. It sets the context by telling about pharma sector in india and which are the growth drivers in india. It also covers Ranbaxy Daiichi Deal.
The Indian Pharma Sector – Mergers and Acquisitions
Introduction
? ?
?
?
N. America, Europe and Japan account for 82% of sales of the $800 billion Pharma industry Annual growth in the European Union (EU) has slowed to 5.8%, Japan (2.1%) and North America (1.4%). Impending policy changes, promoting the use of generics in these key markets are expected to further dent the top and bottom line of global pharma majors. The industry is bracing itself for some fundamental changes in the marketplace and is looking at newer ways to drive growth.
Introduction
?
?
?
?
?
Higher R&D costs, a relatively dry pipeline for new drugs, increasing pressure from payers and providers for reduced healthcare costs and a host of other factors are putting pressure on the global pharmaceutical companies. Pharma companies are looking for new ways to boost drug discovery potential, reduce time to market and squeeze costs along the whole value chain India’s population is growing rapidly, as is its economy – creating a large middle class with the resources to afford Western medicines. India’s epidemiological profile is changing, so demand is likely to increase for drugs for cardio-vascular problems, disorders of the central nervous system and other chronic diseases. Together these factors mean that India represents a promising potential market for global pharmaceutical manufacturers.
The Indian Context
A new patent regime provides better protection of intellectual property rights, although some issues remain. ? Clinical trials can also be conducted here much more cost- effectively than in many developed nations, and some local companies are beginning to develop the required expertise. ? All of these factors add up to a strong case for partnering with Indian companies around R&D, including clinical testing.
?
The Indian Context
Two factors underlie this favourable outlook: 1. India’s demographic profle and a robust services sector. India’s population is currently just over 1.1 billion and projected to rise to 1.6 billion by 2050 – a 45.5% increase that will see it outstrip China as the world’s most populous state. 2. India has also utilised its strengths in IT to become a major offshore business services provider, in marked contrast with most of Asia, which has relied on manufacturing for its recent growth. As a result, services now account for 64.5% of India’s GDP
India healthcare facilities
Doctors Nurses Pharmacies 60 per 100,000 people 80 per 100,000 people 367,000 (urban), 183,000 (rural)
Hospitals
30,000 (67% public, 23% private)32
Hospital beds
1.7 million (one per 1,000 people)33
Health centers
171,687 (including 145,272 subcentres with basic facilities)
Budget Provisions
?
Indian Government promised to increase public expenditure on healthcare to 2-3% of GDP, up from a current low of 1%.
?
The 2008-09 Union Budget highlighted a five year tax holiday for setting up hospitals anywhere in India, especially in tier-2 and tier-3 towns.
The Government further allocated US$51 million for a new health insurance scheme to provide a health cover of US$745 for every worker (including his/her family) in the unorganised sector falling below poverty line (BPL), which was increased to US$76 million in 2009-10 budget. Budget 2010-11 also allocated US$ 2,920 million under the National Rural Health Mission (NRHM), an increase of 15% over the previous year. In 2008, fee-charging private companies accounted for 80% of India’s US$48.6 billion expenditure on healthcare, while central and local Government accounted for only around 20%. Private firms are now thought to provide about 80% of all outpatient care and as much as 55% of all in-patient care.
?
?
?
?
Future Outlook
? ? ? ?
?
?
India’s domestic pharmaceutical industry was worth around US$11 billion in March 2009 and is estimated to rise to approximately US$30 billion by 2020. The domestic market is very fragmented; more than 10,000 firms collectively control about 70% of the market. Many of the local players are generics producers specialising in anti-infectives. India’s manufacturing clout has made it a massive threat to established generics firms – India now produces more than 20% of the world’s generics. Moreover, around US$70 billion worth of drugs are expected to go off patent in the US over the next three years, and India is well-positioned to take a substantial share of the resultingnew generics markets. Indian companies today account for 35% of the Abbreviated New Drug Application(ANDA) approvals granted by the US Food and Drug Administration (FDA) until February 2009
Mergers and Acquisitions
?
? ? ?
?
48 India’s generic houses are now entering into strategic alliances with global pharma companies to strengthen their generic portfolio and jointly market these drugs globally for example Pfizer has entered into alliances with Aurobindo and Claris to market their drugs in offshore markets. GlaxoSmithKline (GSK) has acquired exclusive rights for Dr. Reddy’s Laboratories’ (DRL) pipeline of over 100 generics for sale in emerging markets. In addition to partnering with global pharma, some Indian companies are also setting up their own marketing subsidiaries abroad. India’s pharmaceutical exports totalled around US$8 billion in 2009 and would rise to approximately US$20 billion by 2020. Over the past several years companies such as DRL, Cipla and Lupin have grown internationally in their own right as well
Consolidation underway
?
?
?
The Indian pharma industry as a whole is moving on a consolidation path. The year 2008 saw 57 mergers and acquisitions, a 128% increase over the previous year. Total investment in pharmaceutical, healthcare and biotechnology sectors was second among industry sectors in terms of deal value at US$5.57 billion, marginally below the Telecommunication sector which had total transactions worth US$5.78 billion in 2008. In the same year, India’s largest pharma company, Ranbaxy Laboratories, was acquired by Japan’s Daiichi Sankyo.
Growth Areas
?
?
?
?
Contract manufacturing - The Indian contract manufacturing segment was worth around US$605 million in 2008 and is expected to reach around US$916 million in 2010.62 The US FDA has already approved over 100 manufacturing sites – more than in any country except the US Vaccines are another prominent area of growth. India is one of the largest vaccine producers in the world, with many new vaccines set to be launched in the next five years. The vaccines segment was around US$780 million in March 2008, growing at a compounded annual growth rate (CAGR) of 15%.67 India currently exports vaccines to about 150 countries. It also meets around 40-70% of the World Health Organisation (WHO) demand for the DPT (diphtheria, pertussis or whooping cough, and tetanus) and the BCG (bacille calmette-guérin) vaccine against tuberculosis, and almost 90% of its demand for the measles vaccine
Research & Development
?
?
?
?
?
India’s 10 largest drug firms spent US$480 million on R&D in 2008. The new patent regime means companies need to be more innovative, rather than relying solely on reverse- engineering existing formulations The Indian contract research segment was estimated at around US$485 million in 2008 and is expected to reach around US$1 billion in 2010. Biotech, another knowledge-based sector, is now experiencing a similar boom. Drawing on the success of IT enterprise parks, the Government also inaugurated the first phase of its first biotech-IT park – Bangalore Helix in June 2007. The project is part of efforts to position India as a global hub for bioinformatics and biotech.
Bioinformatics in India
The modern process for drug discovery and testing now generates very large quantities of data through computer modeling and simulations, genetic sequencing, and other data-intensive processes. ? Pharma companies are under increasing pressure to document the efficacy of their products; tracking patient outcomes represents a further source of large quantities of data. ? In order to facilitate the storage, management, retrieval and analysis of this large pool of data, a new subsector of the IT sector has emerged – bioinformatics. ? Revenues for the Indian bioinformatics industry were around US$48 million as of March 2009. India is now actively targeting the bioinformatics market, with the construction of its first biotech-IT park in Bangalore, at a total cost of about US$87 million
?
India’s top10 Pharma Companies
GSK Cipla Aurobindo Sun Pharmaceuticals Piramal Healthcare GSK Ranbaxy (Daiichi) Cadila Healthcare Lupin Dr. Reddy’s Laboratories Glenmark
Source: Annual Reports (2009) & Company Reports
Country sales, 12 months to Q4 2008. USD Million 510 477 449 428 399 368
Country sales, 12 months to Q4 2007 USD Millions 468 416 340 354 395 385
Growth 9.0% 14.5% 31.9% 20.9% 1.2% -4.5%
357
286 232 134
324
261 218 146
10.4%
9.2% 6.3% -8.5%
Tax environment
India is expected to implement a new Direct Tax Code, pending approval, by 2011, would simplify the existing tax structure. ? The new tax code proposes a reduction in the corporate tax rate from the current 30% to 25% and an unlimited carry forward of business losses. ? A dual system GST has also been proposed for April 2010.. The new system India already offers a variety of tax concessions to the pharmaceutical sector, including tax holidays for industrial operations established in free trade zones or under-developed areas; deduction of profits earned from exports; liberal depreciation allowances; deduction of capital R&D expenditure; and relief on all contributions to approved domestic research institutions. ? For pharma manufacturing units, there is an additional weighted deduction of 200% for expenditures relating to in?
Daiichi Ranbaxy Deal
Presence in emerging markets for Daiichi-Sankyo Geographical diversification
Entry into non-proprietary drugs for Daiichi-Sankyo Product Extension
SYNERGY
Realization of sustainable growth through a complementary business model
Acceleration of innovative drug creation by optimizing value chain efficiency.
Shareholding Pattern of Ranbaxy Laboratories Ltd.
0.00% 0.89% 1.72% Daiichi Sankyo Mutul Funds 12.43% Banks, Fin. Inst., Ins Co.
5.30%
4.16%
FIIs Private Corporate Bodies
9.57% 63.92% 2.01%
Indian Public
Foreign Nationals NRIs/OCBs
As of Dec. 2008
GDRs
Daiichi-Sankyo acquired 34.8% stake in Ranbaxy on 11th June, 2008 ? It made an open offer to the Ranbaxy shareholders for another 20% ? It picked up another 9.4% through preferential allotment ? It was an all cash transaction ? Size of the deal: US$3.4-4.6 Bn ? Deal values Ranbaxy at US $ 8.5
?
How did Daiichi-Sankyo acquire Ranbaxy?
How did Daiichi-Sankyo value Ranbaxy?
Assets and Liabilities Book value of assets and liabilities (Cash, Inventory etc.) Inventories (Increase in inventories to fair value) Tangible assets (Land) Intangible assets (Leasehold land) Intangible assets (Increase in current products, etc. to fair value) In-process R&D expenses Deferred tax liability
Minority Interests
Value attributed ($ millions) 804 20 102
60 418
70 -204 -459 4170.408 4982.653
Goodwill
Total consideration
Valuation of Ranbaxy Laboratories Ltd.
Price paid per share by Daiichi 52 week high / low as on 11th June 2008 for Ranbaxy share Valuation of 63.92% stake by Daiichi Rs.737 Rs. 593 / 300 19804 crores
Valuation of 100% equity of Ranbaxy as per the 30982 crores deal Enterprise valuation of Ranbaxy (on a fully diluted basis) Market capitalization of Ranbaxy as on 30th May 2009 (conclusion of deal) $ 8.5 billion 10434 crores
Global down turn due to the financial crisis has made Daiichi take a huge hit on its balance sheet due to the acquisition of Ranbaxy.
Impact of Ranbaxy deal on DaiichiSankyo Balance Sheet
In $ million Net profit / (loss) for Daiichi-Sankyo in FY2008 Net profit / (loss) for Daiichi-Sankyo in FY2009 Reason Recording of ¥351.3 billion in 995.9184 extraordinary losses due to a one-time write-down of goodwill pertaining to the investment in Ranbaxy. -2198.98 It is due to the cash acquisitions of 504.0816 shares in U3 Pharma and Ranbaxy, which entailed cash outgos. 4222.449 Borrowings for the acquisition of 1.020408 Ranbaxy's share ¥ +240.0 billion Increase by consolidation of Ranbaxy 2696.939
Net cash used in investing activities in FY2008
Net cash used in investing activities in FY2009 Short term bank loans in FY2008
Short term bank loans in FY2009
Financing of Deal
?
Daiichi-Sankyo funded the acquisition through
debt and existing cash reserves.
?
Daiichi-Sankyo has a taken a short and long
term loans of 240 billion yens.
?
That’s almost 50% of the total funding
requirement of the deal.
Risks in the deal for DaiichiSankyo
? ?
Ranbaxy’s exposure to the US dollar. US FDA invocation may affect overall business in the country. The anticipated synergies may fail to realize if Ranbaxy faces regulatory hurdles world over.
?
Key Financial Ratios
2007
Dividend Per Share Operating Profit Per Share (Rs) 8.5 10.72
2008
-5.97
2009
-15.5
Operating Profit Margin(%)
Net Profit Margin(%) Return On Capital Employed(%) Current Ratio Debt Equity Ratio
9.31
14.33 4.93 0.83 1.38
5.39
-22.02 2.52 1.16 1.05
13.62
11.72 8.03 1.18 0.85
Inventory Turnover Ratio Asset Turnover Ratio
4.42
2.08
4.07
2.14
4.05
2
Earnings Per Share
16.56
-24.85
13.61
Conclusion
?
?
?
Foreign companies view India as a potential significant contributor of future sales and are ramping up their investments in the country accordingly. India’s domestic market looks promising for global pharma looking to launch new products. The country’s growing capabilities in contract manufacturing, R&D and clinical trials also make it a preferred outsourcing partner for global pharma at every stage of the value chain. Several overseas companies have outsourced research and clinical trials to Indian contractors, while others have entered into collaborative R&D arrangements to supplement their R&D productivity. Many foreign companies have also already initiated research on neglected diseases
Conclusion
?
?
?
Infrastructure deficits continue to exist, although some are being addressed. Intellectual property protection has improved substantially but some holes remain. While the regulatory environment in India has improved substantially in recent years, the industry still faces a number of question marks. Finalisation of Government policies around drug price control, access to OTC drugs, tax policy, intellectual property protection and infrastructure spending is still pending.
doc_373373961.pptx
It explains the M & A in the pharma sector in india. It sets the context by telling about pharma sector in india and which are the growth drivers in india. It also covers Ranbaxy Daiichi Deal.
The Indian Pharma Sector – Mergers and Acquisitions
Introduction
? ?
?
?
N. America, Europe and Japan account for 82% of sales of the $800 billion Pharma industry Annual growth in the European Union (EU) has slowed to 5.8%, Japan (2.1%) and North America (1.4%). Impending policy changes, promoting the use of generics in these key markets are expected to further dent the top and bottom line of global pharma majors. The industry is bracing itself for some fundamental changes in the marketplace and is looking at newer ways to drive growth.
Introduction
?
?
?
?
?
Higher R&D costs, a relatively dry pipeline for new drugs, increasing pressure from payers and providers for reduced healthcare costs and a host of other factors are putting pressure on the global pharmaceutical companies. Pharma companies are looking for new ways to boost drug discovery potential, reduce time to market and squeeze costs along the whole value chain India’s population is growing rapidly, as is its economy – creating a large middle class with the resources to afford Western medicines. India’s epidemiological profile is changing, so demand is likely to increase for drugs for cardio-vascular problems, disorders of the central nervous system and other chronic diseases. Together these factors mean that India represents a promising potential market for global pharmaceutical manufacturers.
The Indian Context
A new patent regime provides better protection of intellectual property rights, although some issues remain. ? Clinical trials can also be conducted here much more cost- effectively than in many developed nations, and some local companies are beginning to develop the required expertise. ? All of these factors add up to a strong case for partnering with Indian companies around R&D, including clinical testing.
?
The Indian Context
Two factors underlie this favourable outlook: 1. India’s demographic profle and a robust services sector. India’s population is currently just over 1.1 billion and projected to rise to 1.6 billion by 2050 – a 45.5% increase that will see it outstrip China as the world’s most populous state. 2. India has also utilised its strengths in IT to become a major offshore business services provider, in marked contrast with most of Asia, which has relied on manufacturing for its recent growth. As a result, services now account for 64.5% of India’s GDP
India healthcare facilities
Doctors Nurses Pharmacies 60 per 100,000 people 80 per 100,000 people 367,000 (urban), 183,000 (rural)
Hospitals
30,000 (67% public, 23% private)32
Hospital beds
1.7 million (one per 1,000 people)33
Health centers
171,687 (including 145,272 subcentres with basic facilities)
Budget Provisions
?
Indian Government promised to increase public expenditure on healthcare to 2-3% of GDP, up from a current low of 1%.
?
The 2008-09 Union Budget highlighted a five year tax holiday for setting up hospitals anywhere in India, especially in tier-2 and tier-3 towns.
The Government further allocated US$51 million for a new health insurance scheme to provide a health cover of US$745 for every worker (including his/her family) in the unorganised sector falling below poverty line (BPL), which was increased to US$76 million in 2009-10 budget. Budget 2010-11 also allocated US$ 2,920 million under the National Rural Health Mission (NRHM), an increase of 15% over the previous year. In 2008, fee-charging private companies accounted for 80% of India’s US$48.6 billion expenditure on healthcare, while central and local Government accounted for only around 20%. Private firms are now thought to provide about 80% of all outpatient care and as much as 55% of all in-patient care.
?
?
?
?
Future Outlook
? ? ? ?
?
?
India’s domestic pharmaceutical industry was worth around US$11 billion in March 2009 and is estimated to rise to approximately US$30 billion by 2020. The domestic market is very fragmented; more than 10,000 firms collectively control about 70% of the market. Many of the local players are generics producers specialising in anti-infectives. India’s manufacturing clout has made it a massive threat to established generics firms – India now produces more than 20% of the world’s generics. Moreover, around US$70 billion worth of drugs are expected to go off patent in the US over the next three years, and India is well-positioned to take a substantial share of the resultingnew generics markets. Indian companies today account for 35% of the Abbreviated New Drug Application(ANDA) approvals granted by the US Food and Drug Administration (FDA) until February 2009
Mergers and Acquisitions
?
? ? ?
?
48 India’s generic houses are now entering into strategic alliances with global pharma companies to strengthen their generic portfolio and jointly market these drugs globally for example Pfizer has entered into alliances with Aurobindo and Claris to market their drugs in offshore markets. GlaxoSmithKline (GSK) has acquired exclusive rights for Dr. Reddy’s Laboratories’ (DRL) pipeline of over 100 generics for sale in emerging markets. In addition to partnering with global pharma, some Indian companies are also setting up their own marketing subsidiaries abroad. India’s pharmaceutical exports totalled around US$8 billion in 2009 and would rise to approximately US$20 billion by 2020. Over the past several years companies such as DRL, Cipla and Lupin have grown internationally in their own right as well
Consolidation underway
?
?
?
The Indian pharma industry as a whole is moving on a consolidation path. The year 2008 saw 57 mergers and acquisitions, a 128% increase over the previous year. Total investment in pharmaceutical, healthcare and biotechnology sectors was second among industry sectors in terms of deal value at US$5.57 billion, marginally below the Telecommunication sector which had total transactions worth US$5.78 billion in 2008. In the same year, India’s largest pharma company, Ranbaxy Laboratories, was acquired by Japan’s Daiichi Sankyo.
Growth Areas
?
?
?
?
Contract manufacturing - The Indian contract manufacturing segment was worth around US$605 million in 2008 and is expected to reach around US$916 million in 2010.62 The US FDA has already approved over 100 manufacturing sites – more than in any country except the US Vaccines are another prominent area of growth. India is one of the largest vaccine producers in the world, with many new vaccines set to be launched in the next five years. The vaccines segment was around US$780 million in March 2008, growing at a compounded annual growth rate (CAGR) of 15%.67 India currently exports vaccines to about 150 countries. It also meets around 40-70% of the World Health Organisation (WHO) demand for the DPT (diphtheria, pertussis or whooping cough, and tetanus) and the BCG (bacille calmette-guérin) vaccine against tuberculosis, and almost 90% of its demand for the measles vaccine
Research & Development
?
?
?
?
?
India’s 10 largest drug firms spent US$480 million on R&D in 2008. The new patent regime means companies need to be more innovative, rather than relying solely on reverse- engineering existing formulations The Indian contract research segment was estimated at around US$485 million in 2008 and is expected to reach around US$1 billion in 2010. Biotech, another knowledge-based sector, is now experiencing a similar boom. Drawing on the success of IT enterprise parks, the Government also inaugurated the first phase of its first biotech-IT park – Bangalore Helix in June 2007. The project is part of efforts to position India as a global hub for bioinformatics and biotech.
Bioinformatics in India
The modern process for drug discovery and testing now generates very large quantities of data through computer modeling and simulations, genetic sequencing, and other data-intensive processes. ? Pharma companies are under increasing pressure to document the efficacy of their products; tracking patient outcomes represents a further source of large quantities of data. ? In order to facilitate the storage, management, retrieval and analysis of this large pool of data, a new subsector of the IT sector has emerged – bioinformatics. ? Revenues for the Indian bioinformatics industry were around US$48 million as of March 2009. India is now actively targeting the bioinformatics market, with the construction of its first biotech-IT park in Bangalore, at a total cost of about US$87 million
?
India’s top10 Pharma Companies
GSK Cipla Aurobindo Sun Pharmaceuticals Piramal Healthcare GSK Ranbaxy (Daiichi) Cadila Healthcare Lupin Dr. Reddy’s Laboratories Glenmark
Source: Annual Reports (2009) & Company Reports
Country sales, 12 months to Q4 2008. USD Million 510 477 449 428 399 368
Country sales, 12 months to Q4 2007 USD Millions 468 416 340 354 395 385
Growth 9.0% 14.5% 31.9% 20.9% 1.2% -4.5%
357
286 232 134
324
261 218 146
10.4%
9.2% 6.3% -8.5%
Tax environment
India is expected to implement a new Direct Tax Code, pending approval, by 2011, would simplify the existing tax structure. ? The new tax code proposes a reduction in the corporate tax rate from the current 30% to 25% and an unlimited carry forward of business losses. ? A dual system GST has also been proposed for April 2010.. The new system India already offers a variety of tax concessions to the pharmaceutical sector, including tax holidays for industrial operations established in free trade zones or under-developed areas; deduction of profits earned from exports; liberal depreciation allowances; deduction of capital R&D expenditure; and relief on all contributions to approved domestic research institutions. ? For pharma manufacturing units, there is an additional weighted deduction of 200% for expenditures relating to in?
Daiichi Ranbaxy Deal
Presence in emerging markets for Daiichi-Sankyo Geographical diversification
Entry into non-proprietary drugs for Daiichi-Sankyo Product Extension
SYNERGY
Realization of sustainable growth through a complementary business model
Acceleration of innovative drug creation by optimizing value chain efficiency.
Shareholding Pattern of Ranbaxy Laboratories Ltd.
0.00% 0.89% 1.72% Daiichi Sankyo Mutul Funds 12.43% Banks, Fin. Inst., Ins Co.
5.30%
4.16%
FIIs Private Corporate Bodies
9.57% 63.92% 2.01%
Indian Public
Foreign Nationals NRIs/OCBs
As of Dec. 2008
GDRs
Daiichi-Sankyo acquired 34.8% stake in Ranbaxy on 11th June, 2008 ? It made an open offer to the Ranbaxy shareholders for another 20% ? It picked up another 9.4% through preferential allotment ? It was an all cash transaction ? Size of the deal: US$3.4-4.6 Bn ? Deal values Ranbaxy at US $ 8.5
?
How did Daiichi-Sankyo acquire Ranbaxy?
How did Daiichi-Sankyo value Ranbaxy?
Assets and Liabilities Book value of assets and liabilities (Cash, Inventory etc.) Inventories (Increase in inventories to fair value) Tangible assets (Land) Intangible assets (Leasehold land) Intangible assets (Increase in current products, etc. to fair value) In-process R&D expenses Deferred tax liability
Minority Interests
Value attributed ($ millions) 804 20 102
60 418
70 -204 -459 4170.408 4982.653
Goodwill
Total consideration
Valuation of Ranbaxy Laboratories Ltd.
Price paid per share by Daiichi 52 week high / low as on 11th June 2008 for Ranbaxy share Valuation of 63.92% stake by Daiichi Rs.737 Rs. 593 / 300 19804 crores
Valuation of 100% equity of Ranbaxy as per the 30982 crores deal Enterprise valuation of Ranbaxy (on a fully diluted basis) Market capitalization of Ranbaxy as on 30th May 2009 (conclusion of deal) $ 8.5 billion 10434 crores
Global down turn due to the financial crisis has made Daiichi take a huge hit on its balance sheet due to the acquisition of Ranbaxy.
Impact of Ranbaxy deal on DaiichiSankyo Balance Sheet
In $ million Net profit / (loss) for Daiichi-Sankyo in FY2008 Net profit / (loss) for Daiichi-Sankyo in FY2009 Reason Recording of ¥351.3 billion in 995.9184 extraordinary losses due to a one-time write-down of goodwill pertaining to the investment in Ranbaxy. -2198.98 It is due to the cash acquisitions of 504.0816 shares in U3 Pharma and Ranbaxy, which entailed cash outgos. 4222.449 Borrowings for the acquisition of 1.020408 Ranbaxy's share ¥ +240.0 billion Increase by consolidation of Ranbaxy 2696.939
Net cash used in investing activities in FY2008
Net cash used in investing activities in FY2009 Short term bank loans in FY2008
Short term bank loans in FY2009
Financing of Deal
?
Daiichi-Sankyo funded the acquisition through
debt and existing cash reserves.
?
Daiichi-Sankyo has a taken a short and long
term loans of 240 billion yens.
?
That’s almost 50% of the total funding
requirement of the deal.
Risks in the deal for DaiichiSankyo
? ?
Ranbaxy’s exposure to the US dollar. US FDA invocation may affect overall business in the country. The anticipated synergies may fail to realize if Ranbaxy faces regulatory hurdles world over.
?
Key Financial Ratios
2007
Dividend Per Share Operating Profit Per Share (Rs) 8.5 10.72
2008
-5.97
2009
-15.5
Operating Profit Margin(%)
Net Profit Margin(%) Return On Capital Employed(%) Current Ratio Debt Equity Ratio
9.31
14.33 4.93 0.83 1.38
5.39
-22.02 2.52 1.16 1.05
13.62
11.72 8.03 1.18 0.85
Inventory Turnover Ratio Asset Turnover Ratio
4.42
2.08
4.07
2.14
4.05
2
Earnings Per Share
16.56
-24.85
13.61
Conclusion
?
?
?
Foreign companies view India as a potential significant contributor of future sales and are ramping up their investments in the country accordingly. India’s domestic market looks promising for global pharma looking to launch new products. The country’s growing capabilities in contract manufacturing, R&D and clinical trials also make it a preferred outsourcing partner for global pharma at every stage of the value chain. Several overseas companies have outsourced research and clinical trials to Indian contractors, while others have entered into collaborative R&D arrangements to supplement their R&D productivity. Many foreign companies have also already initiated research on neglected diseases
Conclusion
?
?
?
Infrastructure deficits continue to exist, although some are being addressed. Intellectual property protection has improved substantially but some holes remain. While the regulatory environment in India has improved substantially in recent years, the industry still faces a number of question marks. Finalisation of Government policies around drug price control, access to OTC drugs, tax policy, intellectual property protection and infrastructure spending is still pending.
doc_373373961.pptx