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Ranbaxy set to list R&D unit this year

Ranbaxy set to list R&D unit this year
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First Published: Wed, Feb 20 2008. 01 02 AM IST
Updated: Wed, Feb 20 2008. 01 02 AM IST
Ranbaxy Life Science Research Ltd, the new drug research company spun off from Ranbaxy Laboratories Ltd, India’s largest drug maker, will be listed on the country’s stock markets in the second half of 2008, subject to regulatory approvals.
The new entity will work on developing 15 new drugs with 300 employees who will be transferred from the parent.
Ranbaxy follows rivals Dr Reddy’s Laboratories Ltd, Sun Pharmaceutical Industries Ltd and Nicholas Piramal Ltd in separating research units that can weigh down overall earnings. The separation will allow the unit to concentrate on research and get funds from other sources.
The parent company will infuse Rs200 crore in the new entity through redeemable preference shares and the hive-off will save roughly $25 million (Rs99.75 crore) in 2008 for Ranbaxy, the company said in a statement.
Ranbaxy shareholders will receive one equity share of Re1 each of the new unit for every four equity shares each of Rs5 face value held in the parent company. Eventually, Ranbaxy and an employee trust of the new company will hold 19.8% and 4.9% of the equity share capital, respectively, with Ranbaxy shareholders holding the remaining equity.
“We will be exploring more alliances and collaborations,” said Malvinder M. Singh, Ranbaxy’s managing director, referring to the company’s tie-up with GlaxoSmithKline Plc., forged in 2003 to identify research potential in respiratory and anti-infective drugs.
That relationship, which will now be with the new company, expects the Indian firm to develop new drugs up to the primary human trials stage, potentially earning it some $100 million, or around Rs400 crore, in revenues for each molecule.
Singh said there was interest from large pharmaceutical and biotech companies to buy a stake in the new company, but the first priority was to get in all regulatory approvals and have shares of the new company listed in India followed by an overseas listing “in future”.
Shares of Ranbaxy rose 4.8% to Rs415.40 per share on Tuesday on the Bombay Stock Exchange.
Bloomberg’s Saikat Chatterjee and Suresh Seshadri contributed to this story.
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First Published: Wed, Feb 20 2008. 01 02 AM IST