PE majors woo Ranbaxy to fund Merck bid

A host of international private equity funds are ���hounding��� Ranbaxy Laboratories with offers to fund the Indian pharmaceutical major���s bid for the generic division of global drug firm, Merck. ���I am being hounded by private equity funds for the Merck,��� Ranbaxy CEO Malvinder Singh said on the sidelines of the World Economic Forum meeting here. He, however, did not divulge names of the equity funds.

Mr Singh is attending the WEF meeting as ���young global leader���. Indian participation for the WEF meeting is being coordinated by India Brand Equity Foundation and CII. India���s number one pharmaceutical company has already announced its intentions to buy the generic division of Merck. Mr Singh said the bid for Merck would formally be made in February, giving Ranbaxy ���both back-end and front-end synergies���. He said if the Merck deal comes through, Ranbaxy would become the world���s third largest generics firm improving its ranking from the present eighth position.

Ranbaxy, which gets 80% of total revenue of $1.34 billion from its overseas operations, did as many as eight acquisitions last year. ���Most of these acquisitions were in the overseas markets,��� Mr Singh said adding that the process of inorganic growth would continue. With a global presence and manufacturing facilities in nine countries, Ranbaxy has started research alliance with Glaxo. The research-oriented alliance would be strengthened, Mr Singh said.

The company has announced a major initiative in the HIV-AIDS space and has filed a patent application with the World Health Organisation, he said. It might take about a year before the company launches this drug in the market. The company has established a strong presence in the African markets for HIV-AIDS drugs. It had acquired South Africa���s Be-Tabs Pharmaceuticals last year.

���We are present in 45 of the 54 African markets,��� Mr Singh said. He said there was no need for the government to control prices because in each of the categories, there are number of choices available in a highly competitive market. ���With controls they (government) will kill the industry which needs to pump in more money in R and D. This is possible if the industry remains viable.��� Denying charges that the industry was making big profits, he said, ���The average profitability for the industry is 10%.���