Indians ask Ranbaxy CEO who's next

In the investment world, the proposed Daiichi Sankyo-Ranbaxy Laboratories merger is just another big deal. But in India, it's taken on symbolic significance. The family-controlled company surrendering to the market, the domestic success story and conferrer of bragging rights selling out to outsiders, the company poised to make its own global mark settling for a spot underneath a multinational umbrella--is it a harbinger of things to come? Will more Indian drugmakers soon fall to M&A fever? For Malvinder Singh, Ranbaxy CEO and grandson of its founder, the questions have been incredulous.

"Have you actually sold your shareholding?" his friends have been asking. Yes, Singh says. And why? Because he and his family concluded that the company could do more as part of a multinational than it could on its own. From Daiichi, Ranbaxy will get expertise at developing new drugs; from Ranbaxy, Daiichi will get generics and low-cost manufacturing and an emerging-market foothold. "I was convinced that the business model in the global pharmaceuticals industry was going to change and that there will be a coming together of 'big pharma' and generics," Singh explains.

Hence the frenzied speculation about which Indian drugmaker is next. If Big Pharma and generics will be joining forces, then India's generics makers are logical takeover targets. And why wouldn't other domestic drugmakers sell out, now that they've seen what Ranbaxy will bring? "A huge positive for Ranbaxy but a negative for Indian pharma," one analyst sniffed.

And speaking of speculation, Singh told the Financial Times that talk of Pfizer quashing the Daiichi deal with a hostile bid of its own is "very speculative." He's not been in talks with the U.S. drugmaker, he says.

- see the BusinessWeek article on copycat deals
- check out the Singh interview in the FT