Ranbaxy, Cipla in bids for Merck's generic biz

Leading Indian drug makers Ranbaxy Laboratories Ltd and Cipla Ltd have submitted bids to acquire the generic drugs business, estimated to be worth $6 billion, of German pharma major Merck KGaA.

Ranbaxy is approaching the bidding race on its own and Cipla is part of a consortium of private equity partners. Cipla's safe play seems to have impressed the market as its scrip rose 1.57 per cent to Rs 236.35 at the close of trading on the Bombay Stock Exchange today. The Ranbaxy scrip declined one per cent to Rs 320.65.

Confirming the development, Amar Lulla, joint managing director, Cipla, said the company is not planning any investments in the deal but would be the technical partner to a consortium. He declined to provide further details.

Ranbaxy confirmed that it "has made a non-binding bid for the asset, at a value it considers fair and reasonable." Malvinder Singh, CEO and MD, said, "We are looking to evaluate the asset and are going to be practical about it. We are not in a rat race for acquisitions but are focused on creating value for our shareholders."

Ranbaxy's stock has been on a decline since the company indicated its interest to bid for Merck's generic business on January 9, 2007. The stock has fallen 23 per cent since that time, compared with a 4.5 per cent decline in the benchmark Sensitive Index, according to Bloomberg.

The agency also indicated that foreign drug giants like Actavis, Stada Arzneimittel AG, Teva, and Novartis are also actively interested in the bidding race.

Once Merck receives non-binding bids from all interested players, the company is to shortlist those it would like to interact with for the final round of negotiations. The discussions may take three to four months before final bidding takes place, sources said.