Ranbaxy setting up Spanish subsidiary

After leapfrogging to be among the top five generic drug companies in France through the acquisition of RPG (Aventis), Ranbaxy Laboratories Ltd is expanding into another key European market, Spain, by setting up a fully owned subsidiary.

The company's board of directors has given its approval for setting up the Spanish subsidiary, Laboratories Ranbaxy SL.

"We have elected to carry out an organic model in Spain," Ranbaxy joint managing director and CEO designate Brian Tempest told Business Standard. The company will be located at Barcelona, the Spanish capital.

The size of the Spanish pharmaceutical market is estimated at seven million euros. Ranbaxy is eyeing various therapeutic segments in the market ranging from antibiotics to gastrointestinal, cardiovascular etc.

So far, Ranbaxy has been exporting to Spain. According to Tempest, Ranbaxy did a business of some $1.4 million in the country.

About an year ago, Ranbaxy had hired Joan Sescofet, who was at that time working with a Spanish generic company, to set up a base for the company there.

Ranbaxy already has six of its products approved for sale in Spain. Tempest said that he hopes to have a portfolio of 25-30 products by the end of the year. He expects the Spanish company to touch a turnover of $20 million by 2007.

When asked why Ranbaxy had chosen to grow organically in Spain instead of an acquisition which would have given it a critical mass to begin with, Tempest said that the evolution of the Spanish pharmaceutical company was different from that of France.

The generic drugs market at around $250 million in Spain is much smaller as compared to France, though it is growing fast.

This gives the company enough time to set up its own network in the country. Getting approval for products in Spain can take 12-15 months.

However, Tempest indicated that Ranbaxy is not through with acquisitions in Europe. Though the company has emerged as a leading generics player in the United Kingdom as well as France, Tempest said that Ranbaxy was still small in Germany. The company had entered the German market some years back when it acquired Basics GmbH from Bayer.

"It is doing quite well, but the company is still small. We will have to look at inorganic growth there," he said.