Japan’s third-largest drugmaker will get a 50.1 percent stake in India’s largest pharmaceutical company in a bid to diversify as government price cuts shrink margins and generics outpace brand-name meds.
The move mimics Novartis, which operates the Sandoz unit that swallowed up two generic drugmakers in 2005 to reduce reliance on brand-name drugs. “Daiichi Sankyo’s strategy follows Novartis and it’s convincing,” Fumiyoshi Sakai, a health-care analyst at Credit Suisse Securities, tells Bloomberg News . “The essence of the deal is Daiichi Sankyo will seriously challenge generic business.”
Price cuts in Japan mean that Daiichi Sankyo’s profit is likely to fall 18 percent this year as its main blood pressure treatments lose sales. Meanwhile, local rivals - Takeda Pharmaceutical, Astellas Pharma and Eisai - have spent more than $14 billion on acquisitions since November 2007 to buffer sales declines as their best-selling drugs lose patent protection, Bloomberg reminds us.
“The proposed transaction is in line with our goal to be a global pharma innovator and provides the opportunity to complement our strong presence in innovation with a new, strong presence in the fast growing business of non-proprietary pharmaceuticals” Takashi Shoda, Daiichi’s CEO, says in a statement . In particular, the deal gives Daiichi greater reach into India, China and Eastern Europe.
The Japanese pharmaceutical market will grow 1 percent to 2 percent this year, according to IMS Health, while India’s pharmaceutical market may expand by more than 12 percent a year, reaching $20 billion by 2015, McKinsey said in a report in August, Bloomberg notes.
“This signals that there is a lot of value in the Indian pharmaceutical industry, Jayesh Shroff of SBI Asset Management in Mumbai, tells Bloomberg. “The drugmakers have underperformed in the past three years. It’s also a good signal for the overall market with about $4 billion in foreign direct investment coming in.”
The acquisition will help Japan to increase the volume of generics as a part of a governments plan to trim health care spending. Japan wants generics to account for 30 percent of prescriptions by 2012 from 17 percent, according to Bloomberg. (The above news was published in Pharmalot)
The move mimics Novartis, which operates the Sandoz unit that swallowed up two generic drugmakers in 2005 to reduce reliance on brand-name drugs. “Daiichi Sankyo’s strategy follows Novartis and it’s convincing,” Fumiyoshi Sakai, a health-care analyst at Credit Suisse Securities, tells Bloomberg News . “The essence of the deal is Daiichi Sankyo will seriously challenge generic business.”
Price cuts in Japan mean that Daiichi Sankyo’s profit is likely to fall 18 percent this year as its main blood pressure treatments lose sales. Meanwhile, local rivals - Takeda Pharmaceutical, Astellas Pharma and Eisai - have spent more than $14 billion on acquisitions since November 2007 to buffer sales declines as their best-selling drugs lose patent protection, Bloomberg reminds us.
“The proposed transaction is in line with our goal to be a global pharma innovator and provides the opportunity to complement our strong presence in innovation with a new, strong presence in the fast growing business of non-proprietary pharmaceuticals” Takashi Shoda, Daiichi’s CEO, says in a statement . In particular, the deal gives Daiichi greater reach into India, China and Eastern Europe.
The Japanese pharmaceutical market will grow 1 percent to 2 percent this year, according to IMS Health, while India’s pharmaceutical market may expand by more than 12 percent a year, reaching $20 billion by 2015, McKinsey said in a report in August, Bloomberg notes.
“This signals that there is a lot of value in the Indian pharmaceutical industry, Jayesh Shroff of SBI Asset Management in Mumbai, tells Bloomberg. “The drugmakers have underperformed in the past three years. It’s also a good signal for the overall market with about $4 billion in foreign direct investment coming in.”
The acquisition will help Japan to increase the volume of generics as a part of a governments plan to trim health care spending. Japan wants generics to account for 30 percent of prescriptions by 2012 from 17 percent, according to Bloomberg. (The above news was published in Pharmalot)
IPPharmadoc analysis of News: The deals many experts say is good for Ranbaxy as it got more than its value in the market. But a careful examination of the deal shows that Singh brothers (Malvinder and Shavinder) have anticipated future losses and the various litigations on Atorvaststin, Nexium, Valaciclovir and other products proved quite expensive for the company. Ranbaxy in recent times have settled their patent disputes with innovators on products like Nexium and Valacyclovir. Although Ranbaxy has First To file exclusivity on some products in US but their launch is possible only by end of 2009. Further, a cut of share in domestic market and adverse patenting outcomes led Singh Brothers to strike the deal.
The deal was on cards after the USPTO reexamination of '893 product patent of Atorvastatin(the decision was against Ranbaxy) and Ranbaxy could market generic form of Lipitor and Caudet only in March 2010. As the reports shows taht singh brothers were in negotiation with GSK, Daiichi and Novartis since the the last 4 months
But overall the deal is good for Daiichi whose innovative products were getting off-patent and their revenue was decreasing. A strong generic company like Rabaxy with excellent infrastructure and proven R&D capabilities will add color to Daiichi's Generic business.
