Mumbai/New Delhi: Twenty two potential buyers, including three of India’s largest drug makers—Ranbaxy Laboratories, Dr Reddy’s Laboratories and Cipla—are set to submit non-binding offers for Merck Generics on 12 March, the non-patented drugs business of German major Merck KGaA.
A merchant banking official associated with one of the Indian bidders said since the $6 billion (Rs26,530 crore) valuation for Merck Generics seems high compared to its $2.3 billion of revenues, companies such as Ranbaxy and Dr Reddy’s are partnering global private equity funds to bid jointly.
Malvinder Mohan Singh, managing director, Ranbaxy, told Mint that the company is looking to evaluate the asset and “we are going to be very practical about it”. According to industry sources, Ranbaxy has roped in Citigroup as its advisor and is talking to Citigroup Venture Capital to partner it for the bid for one of the last few big generics companies available for sale.
The Merck unit is currently the world’s fourth-largest generic drug maker and is the biggest up for sale since the US’ Ivax Corporation was bought by Israel-based Teva for $7.6 billion in 2006. US investment bank Bear Stearns has been engaged by Merck to oversee the generic unit’s sale.
A Merck KgaA spokesperson declined comment on the number of bidders and the date for bids but added, “We have started contacting interested parties.”
International generic companies such as Teva, Iceland’s Actavis, Stada Arzneimittel of Germany, Novartis AG’s generic arm Sandoz, Mylan Lab and Barr Pharmaceuticals from the US and South Korea’s LG Life are learnt to be among the other bidders.
A host of global private equity funds including Actis, Bain, Apax, Kohlberg Kravis Roberts, Warburg Pincus, BlackStone Capital and Carlyle Group are also expected to bid for the Merck unit. According to officials familiar with the development, Bain will be submitting the offer jointly with Apax.
KKR and Warburg have roped in Cipla as their technical partner in the bid. Amar Lulla, Cipla’s managing director confirmed its financial partners would be submitting their bid next week.
Merck’s decision to divest the generic business follows its plans to focus on branded medicines after acquiring the Swiss biotechnology company Serono SA in January.