Thursday June 12, 03:20 PM
Ranbaxy may use M&A to grow in Japan generics market |
|
By Edwina Gibbs
TOKYO (Reuters) - Ranbaxy Laboratories Ltd said on Thursday it sees huge opportunities for growth in Japan's generics drug market and mergers and acquisitions are a likely option for it to expand.
The attractiveness of the market was a big factor in Ranbaxy's decision to team up with Daiichi Sankyo Co Ltd, Ranbaxy Chief Executive Malvinder Singh told a news conference in Tokyo.
Faced with an ageing population and ballooning healthcare costs, Japan's government has recently taken steps to promote the use of the off-patent drugs, including making generics the default option over brand-name counterparts on prescription forms.
Japan has a very low rate of generic drug use, around 17 percent of volume compared with 63 percent in the United States.
"There is tremendous opportunity here and clearly we would want to explore it to the fullest," Singh told a news conference.
"I think we would use a combination of organic and inorganic growth to strengthen our presence," he said, adding that he expects the market to expand significantly over the next five to 10 years.
Daiichi Sankyo and Ranbaxy announced a day earlier that Japan's No. 3 drug maker would pay up to $4.6 billion for control of the Indian generic drugs maker, with the two firms seeking to become a pharmaceuticals powerhouse that sells both branded drugs and generics.
Until this deal, only Swiss-based Novartis AG among large brand-name drug manufacturers has fully embraced generics through its Sandoz unit, which is among the world's largest generic makers.
Shares in Nippon Chemiphar, with which Ranbaxy has a joint venture in Japan, and in Sawai Pharmaceutical Co Ltd, Japan's biggest generics drug maker, surged after news of the deal as speculation mounted that Ranbaxy or other big pharmaceutical firms would be interested in acquiring a Japanese generic drug maker.
Nippon Chemiphar shot up 5.2 percent to 524 yen on Thursday while Sawai rose 4.2 percent to 4,480 yen, outperforming the broader market which fell 2 percent.
Daiichi Sankyo said, however, that it expected Ranbaxy to operate as a stand-alone company and would not be directly involved in the Japanese generic drugs market.
Daiichi Sankyo Chief Executive Takashi Shoda added that he had had his eye on Ranbaxy for some time and approached Singh about a possible deal last year.
|
