Daiichi buys $4.6B stake in Ranbaxy

These days, emerging markets and generic drugs are hot, and Japan's Daiichi Sankyo just landed a deal that capitalizes on both trends. The company is shelling out a hefty $4.6 billion for a majority stake in India generics giant Ranbaxy. The deal values Ranbaxy's shares at 737 rupees a piece, a 31 percent premium over yesterday's close. Ranbaxy will become a subsidiary of Daiichi but Malvinder Singh will remain its CEO. In a statement, the companies outlined several reasons for the merger. Daiichi said the move allows it to diversify into generics; it also gets its foot in the door with the fast-growing emerging markets that so many drug developers are targeting. In addition, Daiichi gains access to the affordable Indian R&D and manufacturing facilities Ranbaxy brings to the table.

"The combination of the two companies will give Ranbaxy access to Daiichi's expertise in research while the Jap anese company will benefit from low-cost production on the sub-continent, amid a deepening profits crisis in Japan's drugs industry," observes the Times Online. Last year Daiichi announced a surprising sales-growth target: a whopping 60 percent over the next three years, based on its hopes for Azor and two other meds coming up the pipeline.

"This complementary combination represents a perfect strategic fit and delivers a considerable opportunity for the future growth of the new Daiichi Sankyo Group," said Takashi Shoda, CEO of Daiichi Sankyo

- check out this release for more on the deal
- read this article for more