Global Insight Perspective | |
Significance | Ranbaxy acquired 13 brands from Bristol Myers Squibb's (BMS; U.S.) stable, gaining it access to the U.S. market. It also finally sealed its 15% stake acquisition in Jupiter Biosciences (India). |
Implications | The deals represent Ranbaxy's renewed push towards using inorganic growth opportunities in order to propel its business in the United States and India. |
Outlook | The transactions will present a boost to the company's depressed U.S. sales as Jupiter plans to increase its presence in the peptide market. |
Ranbaxy's Acquisition
U.S. pharma major Bristol Myers Squibb (BMS) has entered into an agreement with India's Ranbaxy Laboratories relating to the former's 13 products in the dermatology segment. Ranbaxy has bought out the U.S. marketing rights for these drugs from BMS for a total consideration of US$26 million, reports Asia Pulse, quoting Ranbaxy CEO Malvinder Singh. According to Ranbazy, the drugs were used in the treatment of acne, dermatitis, psoriasis, fungal infections, and scabies. The products have an annual turnover of US$15 million and revenues are expected to reflect on Ranbaxy's financial data from the end of May. The dermatology market in the United States is pegged at US$10 billion, and the Indian firm believes it has good potential for growth with the inclusion of the 13 products. Currently, Ranbaxy has just one dermatology product, namely Sotret (isotretinoin), in dosage forms of 10 mg, 20 mg, 30 mg, and 40 mg. Sotret is indicated for the treatment of severe recalcitrant acne. The product is one of three brands that Ranbaxy has in the United States, the others being diabetes product Riomet (metformin) and corticosteroid Proctosol (hydrocortisone).
The company also completed its acquisition of 3.17 million equity share warrants, representing 14.91% of Jupiter Biosciences. The culmination follows the announcement of its intention last month as well as endorsement from the company's board. At the time, Ranbaxy made clear that the stake acquisition also includes a strategic business tie-up on peptide pharmaceuticals for the international market, the source reported. The deal brings to fore Ranbaxy's corporate strategy to expand its product portfolio through partnerships and strategic investments.
Outlook and Implications
The two developments reinforce the Indian firm's resolve to adopt different means in order to achieve growth. The acquisition of 13 brands from BMS props up Ranbaxy's dermatology portfolio for the first time, and although revenues are limited to the United States, the addition is expected to directly accrue to topline growth for the company. Ranbaxy's U.S. operations have experienced a series of transformations since the company started investing in the country a decade ago. The Indian firm has a sizeable generics portfolio and is aggressively pursuing drugs set to go off-patent within the next five years. However, what has stood out in the past year and a half is Ranbaxy's renewed vigour at adapting to the changing generic pressures of the U.S. market. This has seen the company forge alliances with Indian firms seeking to introduce products in the United States, such as Zenotech and Ipca Laboratories. The stake acquisition in Jupiter Biosciences is also aimed at the U.S. operations, particularly in the peptide market, where Jupiter has a presence. The deals are particularly important for Ranbaxy in the context of the continuing struggle to post positive growth figures in the United States. In the first quarter of FY 2006/07, Ranbaxy's U.S. sales were flat, garnering US$86 million against a marginal 3% rise in the total North American market.
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