THE NAME IS "R-A-N-B-A-X-Y"

Every day in the morning i see this giant's name when i am in my way to my office. I feel very sad that the ultimate power of the giant is being diluted. Yes guys i am talking about the number one company in India and the company in the top 100 around the world. The name is 'RANBAXY' and the field in which it tops is the pharmaceutical sector. Lately ranbaxy is all set up to become a major subsidiary for the Japanese giant Daiichi Sankyo by selling its CEO owned shares of 34.8%. Frankly speaking i didn't even expect this from an India top most pharmaceutical company and an market leader. It is the company which threatened worlds major pharmaceutical giant which is pfizer for its litigations on the block buster drug lipitor which is going to off patent in the coming years.

The main reasons which pushed ranbaxy for this deal is that the company is not able to get its output from the drug discovery area even though its spending huge amounts in this field of R&D.Means all the capital is being locked with out any output.The R&D pipeline is not growing as the way it is meant to be growing. And the second reason is that even its generic business is not performing well with very less increase in market share price when Indian market is in its euphoric state.In the contrary to the previous statement it did perform well in the previous financial year in meeting the targets. But achieving the targets in the coming years may be less likely for the giant because of its poor market performances. The litigations with pfizer must also have eaten away a significant part of the ranbaxy's revenues in the sloppy years.

So because of above reasons and may be many others the only options left with ranbaxy is that:

1. They can merge with a major pharmaceutical giant to flourish their business in the field of drug discovery as done by many others like Glaxo smithkline & Sanofi Aventis etc. But may be Ranbaxy don't want to do this because will be they will be only an junior kind of company under the big pharmaceutical giant. Even this merging with the giants will not be a good option for the giant because the big pharmaceutical companies merge only with their major competitors and not with other small competitors.

2. Acquisition of other companies to expand and develop the business areas in which they are lagging. But this is not a good idea for the company which is under performing as per their set standards. Lately i heard form a friend of mine who is working in ranbaxy that their are going to acquire an Contract research organization for expanding their business. But after some days he said that the idea is being dropped off. This explains my point here.

3. So the only option that is left is that to sell off may not be at an instance but progressively. This can give them capital for other investments. And today ranbaxy and pfizer signing truce in the case of lipitor and settling it off court indicates that ranbaxy is not wishing to go further in this litigation aspect which costs them huge amount of money. But by settling this pact ranbaxy got huge sum of money. This also indicates that they are striving to collect the capital for other investments.

Summing up all this my view is that ranbaxy must not be doing this. Major pharmaceutical companies likes Glaxo smithkline, pfizer etc have taken hundreds of years for coming to the worlds pharmacueticals top 10 list. Hence patience is the key. Ranbaxy must have been patient enough in developing their drug discovery pipeline. They should have worked out why everything is going wrong in the case of drug discovery and invested in new technologies which can enrich their pipeline. I think they should have formed alliances/deals with other Indian pharmaceutical companies in developing molecules for life in cases of cancer , AIDS for Indians at least because drugs for these diseases are very costly and less available.If they put in only some significant efforts they could be doing good even in the field of generics and generate a good revenue out of it which can be invested to develop the pipeline.

That's all from me about the giant. I have written such a huge article because i was very much moved when ranbaxy has taken this decision. When India's top most pharmaceutical company is doing this then it may be a kind of discouragement for the smaller firms which are investing in R&D of drug discovery.

Peopleplease leave your comments about this article. Some of the views are taken from Economic times also for your information.