Japan's Daiichi Sankyo to Take Control of India's Ranbaxy

Purchase price is $4.6 billion

Japanese pharmaceutical group Daiichi Sankyo Co. said June 11 that it had agreed to buy a majority stake in India's top drug company Ranbaxy Laboratories for up to $4.6 billion. The move reflects growing efforts by the world's pharmaceutical giants to cope with fierce competition from generic drugmakers based in low-cost economies such as India.

The move will "complement our strong presence in innovation with a new, strong presence in the fast growing business of non-proprietary pharmaceuticals," Daiichi Sankyo chief executive Takashi Shoda said. More than 90% of Ranbaxy's sales come from generic products.

The company and other, similar firms vie in the U.S. and Europe to grab first rights to sell inexpensive generic drugs. Ranbaxy has expanded abroad by selling inexpensive copies of branded drugs off-patent and through successful challenges to patents owned by Western companies. It has said it aims to be one of the world's top five generic drugmakers by 2012 with sales of five billion dollars.

Industry watchers said the deal could shake up the Japanese pharmaceutical sector. "With this deal, competition in the generic drug market will get tougher," said Takashi Akahane, analyst at Tokai Tokyo Securities. "I expect a drastic realignment in the drug industry in Japan. It will become more severe for mid-sized drug makers to survive."

Copyright Agence France-Presse, 2008

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