'Eventful' would be an apt term to describe the year 2008 for the Indian pharmaceutical industry, for it saw huge excise duty cuts, foreign firms acquiring domestic ones, legal tussles against the USFDA ban on import of some drugs, et al.
And hogging the limelight was Ranbaxy Laboratories, which was accused of trying a hostile takeover of Chennai-based Orchid Pharmaceuticals, and ended up itself being acquired by Japan's Daiichi Sankyo in a total deal valued around Rs 21,000 crore — the largest-ever in Indian pharma industry so far.
While Ranbaxy and Orchid settled for an amicable solution with the former taking less than 15% stake in the latter, the Gurgaon-based firm could not prevent a crackdown by the US Food and Drugs Administration (USFDA), which banned import of 30 of its generic drugs.
Sun Pharmaceuticals was also in the news for a good part of the year after its failed bid to take over Israel's Taro Pharmaceuticals.
A year after striking a $454-million deal, Sun found the Israeli firm was no longer willing to be acquired and what followed was a long-drawn court battle and a game of one-upmanship, with Sun making an open offer to Taro shareholders. The matter is far from being settled.
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Yet, the year could not have begun on a better note for the industry, which is poised to become a $33-billion market by 2011-12, including $22 billion of exports (as per consultancy firm KPMG estimates).
The then Finance Minister P Chidambaram halved the excise duty on pharmaceutical products from 16% to 8% in the Budget.
Towards the end of the year, excise duty came to 4% when the government announced another 4% cut in CENVAT.
The pharmaceutical companies were, however, not so pro-active as their counterparts in other sectors to pass on the benefits of the CENVAT cut and the price regulator National Pharmaceutical Pricing Authority (NPPA) had to step in and ask them to cut prices of some scheduled formulations.
With the proposed National Pharmaceutical Policy forgotten and failing to see the light of the day this year too, it was left entirely to NPPA to check the prices.
One of the significant developments of the year was the reversal of the trend of Indian firms going for acquisitions abroad. Ranbaxy and Dabur Pharma came under the control of foreign firms in multi-crore deals.
In the first major merger and acquisition activity of the year, Delhi-based Dabur Pharma was acquired by Singapore-based Fresenius Kabi for around Rs 1,000 crore, when the promoters, the Burmans, sold off their entire 73%. An open offer for another 20% stake that followed gave Fresenius Kabi over 90% control in Dabur Pharma.
The deal of the year, however, was that of Ranbaxy and Daiichi Sankyo. Ranbaxy promoters, the Singhs, decided to exit the company and offloaded their 34.82% stake. It was followed by an open offer for 20% and issue of preferential allotment and warrants, totalling 63.82% stake that cost the Japanese firm around Rs 21,000 crore.
Malvinder Singh continued to be the CEO and Managing Director of Ranbaxy though.
The firm was also in the news for wrong reasons, with the American health regulator banning the import of 30 drugs produced in Ranbaxy's two USFDA approved plants at Dewas and Poanta Sahib.