Chinese-Indian pharma deal
It is significant, I think, when a company from one major Asian company buys another, with no Western company involves as buyer of seller. That' shat happened last week when the #3 Japanese drug company, Daichi Sankyo, announced a deal to buy a controlling share in Indian drug company Ranbaxy Laboratories, the #1 Indian drug firm. The deal was for around $4.6 billion. Daichi Sankyo is the result itself of a 2005 merger Japanese drug companies.
Ranbaxy's specialty is generic drugs, while Daichi Sankyo specialized in patent drugs. The move is an important one, in that generic drugs are growing much faster than patent ones. Ranbaxy is growing fast, and hopes plans to be among the top five generics companies in a few years.
As a Bloomberg story ("Daiichi Sankyo to Buy Ranbaxy for as Much as $4.6 Bln", 8/11/08) notes, "Daiichi Sankyo is mimicking strategies pursued by the Swiss pharmaceuticals company [Novartis] and Johnson & Johnson to weather turbulence in the branded-drug industry by diversifying into other markets. The acquisition also gives the Japanese company more reach in emerging regions including India, China and Eastern Europe."
The question is why the other giants of the pharmaceutical industry have ignored generics or even sold off their generic business. It is rumored, however, that US-based Pfizer might be considering a higher bid for Ranbaxy.
The interesting thing, according to a Wall Street Journal article, is the rise of India as a global power with firms worth billions. "The pharmaceutical sector is the latest example of India's and China's climb up the value chain. While China is working its way up the ladder from manufacturing and clinical trials, India is starting with high-level R&D. As this happens, Indian and Chinese companies are becoming increasingly important players in the global mergers and acquisitions game, both as targets and as acquirers."
All this, the article ("Welcome, Global Pharma", 8/17/08) states, is a product of that growing fact that "Indian and Chinese scientists are rapidly developing the ability to create their own intellectual property."
8:15:41 PM 
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