Pfizer may counter Daiichi's Ranbaxy offer

Pfizer Inc, the world's biggest drug maker, may bid for the 65 per cent non-promoter stake in Ranbaxy Laboratories, sources familiar with the developments said declining to be identified.

Malvinder Mohan Singh, managing director & CEO of Ranbaxy, and his family yesterday signed a binding agreement with Daiichi Sankyo to sell their entire 34.82 per cent stake for as much as $4.6 billion in one of the largest deals in the Indian pharma space.

Institutions and individuals hold 41.28 per cent and 21.24 per cent, respectively, in Ranbaxy. Others have the balance 2.66 per cent stake.

Pfizer's possible bid could queer the pitch for Daiichi, which is seeking to acquire another 17 per cent in Ranbaxy, India's largest pharma company, through an open offer at Rs 737 a share.

Pfizer, which held talks with the Ranbaxy founders for a possible acquisition a year earlier, may offer to buy out the stake held by lenders and other investors, the sources said.

When contacted, a Ranbaxy spokesperson said, "We have a binding agreement with Daiichi Sankyo and it is a final agreement. We will not comment on market speculation."

A Pfizer spokesperson said the Indian arm and its parent would not comment on speculation.

Legal experts believe that any company could make a counter offer to buy Ranbaxy even after an agreement of sale is reached.

Somasekhar Sundaresan, partner J Sagar Associates, said, "Anyone can make a counter offer for the non-promoter stake within 21 days of the open offer at a comparable price."

The US-based company is battling Ranbaxy in about 18 countries on patent rights of Lipitor, the largest selling cholesteral drug in the world. Lipitor has annual sales of $13 billion. In most countries the patent on the drug will expire starting 2011.

Ranbaxy has won favourable verdicts on Lipitor in many of the geographies including in the US, the largest drug market in the world, which accounts for 28 per cent of the global generic market estimated at $72 billion.

Pfizer, which is facing patent expiry on some of its large selling drugs, lacks a large pipeline of new drugs.

The sources said Ranbaxy had earlier held discussions with both Pfizer as well as GlaxoSmithKline Pharma (GSK), but valuations were a deterrent in completing the deal.