THE Ranbaxy deal could pave the way for promoters of Indian pharma companies to rethink their strategies, especially relating to divestment. Using this deal as a benchmark, other promoter-driven companies could opt for a similar route to scale up operations, say analysts.
“They have to opt for the strategic investment route to bring in expertise to thrive in the rapidly changing market environment,” a pharma industry player said. Besides, innovator companies are now coming to emerging markets in a very aggressive way and that could trigger some disinvestments by Indian players. Typically, such a play would be seen by those wishing to move up to the next level.
Companies which are promoter-run would include the likes of Dr Reddy’s, Aurobindo, Cadilla, Lupin among others. According to shareholding pattern data, promoters and promoter groups hold 25.14% stake in Dr Reddy’s, 51.12% in Lupin, 72.02% in Cadila and 55.27% in Aurobindo.
Strategy apart, the issue of divestment has also been one of high emotions, especially since some of these companies have been pioneers in their field of work. Analysts reckon that the Ranbaxy deal could now make future deals less of an emotional struggle. “The final threshold has been pierced with the Ranbaxy deal. The process will be more business-like and less-emotional in subsequent deals of this nature, if and when they happen,” says Sanjeev Kaul, managing director of Chrys Capital. Hyderabad, India’s bulk drug capital, has already seen some action when the promoter of Matrix, which was valued at $1 billion, sold out to US-based Mylan, and French biotech major Bio Merieux picked up 60% stake in vaccine player Shantha Biotechnics.
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