Ranbaxy Labs Limited Chairman, Parvinder Singh, has not ruled out further acquisition to consolidate the companys position in the domestic drugs market. Addressing a press conference here yesterday, a day after the boards of Ranbaxy Labs and Croslands Lab approved the merger between the two drug companies, Singh said: We will increase our market share in a planned and aggressive manner.
Elaborating further, Singh said: We are open as a management to create relations, to acquisitions, mergers or whatever it requires to become strong players in the domestic market. The company recently acquired all the major brands of Gufic Labs and has set aside funds for acquiring companies. The Croslands merger gives Ranbaxy access to dermatological and orthopaedic markets in which it had no presence at all.
The press conference was jointly addressed by Singh and managing director of Croslands Labs, GK Ramamurthy.
The merger is a significant landmark in the brief history of Croslands as it will give us the necessary research and development capabilities required to be first in the market, he said.
The share capital of Ranbaxy post-merger will increase to Rs. 51.39 crore, from the earlier Rs. 48.11 crore, Rs. 3.28 crore being added as a result of the Croslands merger.
The Ranbaxy promoters stake will go down by 2-2.5 per cent while the Croslands promoters will get 3.2 per cent share in the company with a market capitalisation of Rs. 90 crore.
Ranbaxy Labs Ltd will now have a 4.9 per cent share of the domestic drugs market, with Ranbaxy contributing 3.9 per cent, Croslands 0.7 per cent, Eli Lily Ranbaxy 0.2 per cent and Solus 0.1 per cent. The move of the merger with Croslands will help it to displace Cipla from the number two slot, which has a 4.2 per cent share of the domestic market.
The merger will be registered in Punjab because the stamp duty is much less as compared to Maharashtra, said Singh.
Post-merger, the company will have a field force of 1377 with four marketing teams- Basic Pharma, Stancare, Solus and Croslands. However, the incongruities in the pay packets of Croslands and Ranbaxy will remain as Croslands will be treated as a separate profit centre, said Shankar.
V. Shankar said that the merger was beneficial to the company as it would now have a presence in exports and will have sufficient funds at its disposal for research and development expenses, which the company could not have afforded on a sustained basis.
He said that now the products of the company would be registered in markets abroad. Although the company does not have international marketing rights for the products of comp[anies with which it has collaborations, Ranbaxy can market a major profit making products.
The reason why Croslands had called off its plans to merge with Nicholas Piramal because the FIIs and the companys employees had strongly objected to the idea, said Crosland MD, GK Ramamurthy. Besides, the stock market of the scrips had fallen after the plan to merge the two companies had been announced. Employees of Croslands had also turned hostile to the proposal for a merger with Nicholas Piramal.
