We're wondering whether Daiichi Sankyo has buyer's remorse. The Japanese company reported big losses from its new Indian subsidiary Ranbaxy Laboratories today--losses that took an enormous chunk out of Daiichi's stake in the firm. That ownership percentage now is worth less than a third of its purchase price; $1.4 billion compared with $4.9 billion just last year. And Daiichi expects Ranbaxy to continue to lose money, eroding its own annual results for fiscal 2009.
Daiichi bought majority ownership in Ranbaxy last year in a deal that made the company's founding Singh family even more wealthy than it was before. But soon after the deal closed, Ranbaxy was hit with a ban on U.S. imports; plant employees were accused of falsifying inspection records and the FDA wasn't happy with the company's quality control.
And now, Daiichi isn't happy with Ranbaxy's management. So unhappy that it's going to take charge itself, President Takashi Shoda told a news conference. "The key to turning around Ranbaxy's earnings is to resolve its problems with the FDA," Shoda said (as quoted by Reuters). "As Ranbaxy is now an important part of Daiichi Sankyo, Daiichi Sankyo aims to resolve the problems by getting actively involved in Ranbaxy's management."
Meanwhile, Daiichi and Ranbaxy have been negotiating with the FDA about getting Ranbaxy's meds back on track. No specifics on those discussions yet, though.
- read the Reuters news