New Delhi: Ranbaxy Laboratories Ltd, India’s largest drug maker by sales, plans to pick up minor stakes in smaller drug companies to strengthen its product portfolio, secure its supply chain and market more drugs globally.
The company is currently in discussions for a 14.9% stake in Hyderabad-based Jupiter Bioscience Ltd; and, according to analysts, its next logical step would be to target the niche segment of injectable antibiotics. Ranbaxy confirmed the strategy, but wouldn’t specify the drug segments in which it plans to expand. “We are open to more such alliances, both in the domestic market and overseas, that will augment our product basket and create value for our shareholders,” said Malvinder Mohan Singh, MD, Ranbaxy, adding that the company was discussing the stake offer from Jupiter Bioscience and “we will go ahead with it after due diligence.”
The Gurgaon-based Ranbaxy picked up a 14.9% stake in Krebs Biochemicals and Industries Ltd earlier this year and in Zenotech Laboratories Ltd last year. Under guidelines set by stock-market regulators, a company that acquires a stake in excess of 15% in another must make an open offer to the latter’s shareholders.
While Singh declined to give details of the forthcoming deals, a Mumbai-based analyst who requested anonymity said, “Injectables are a missing link in their product portfolio.”
Drugs that can be delivered by an injection represent a $115 billion market opportunity in the US alone, and are comparatively insulated from intense competition from non-patented drug makers. Injectable-drug makers need dedicated manufacturing sites, which involve big investments.
The synergies for Ranbaxy in all these deals are multiple. While Zenotech is a maker of specialist cancer drugs and biosimilars—knock-offs of patented biotech drugs—Krebs has a stronghold in fermentation-based drugs and active pharmaceutical drugs. Jupiter, on the other hand, will secure supplies of peptide pharmaceuticals to Ranbaxy; this represents a $7 billion market globally. “We are looking for companies in whose product portfolios we have a commercial interest and where we can invest along with other stakeholders. We see huge revenues coming in from these strategic alliances between 2008 and 2013,” Singh said.