Portrait of an Indian Pharma acquisition 'failure'

The Wall Street Journal features a little case study in what can go wrong three years after an acquisition that was once billed as a match made in pharmaceutical heaven.

Back in June 2008, Tokyo-based Daiichi Sankyo acquired India's Ranbaxy, a drugmaker specializing in generics, for $4.6 billion. At the time, Daiichi said the acquisition would help it access the American and Indian markets.

Ranbaxy CEO Malvinder Singh had vowed that the company "was in his genes" and would not jump ship. Fast-forward about a year, and Singh parachuted out, clutching a 4.5 billion rupee severance package, according to the WSJ.

What went wrong? Timing. Three weeks later, the FDA banned imports of 30 of Ranbaxy's generic drugs. What went right? After some initial stumbles, Daiichi has indeed gained some synergies with Ranbaxy's R&D. But the overall verdict from the WSJ is "fail."

"This is a classic example of an acquirer paying top price without looking too closely at the quality of the goods," the analysis concludes.

- read the whole thing in WSJ's Deals India

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