Ranbaxy opts out of race for Merck's generics biz

Ranbaxy Laboratories is understood to have pulled out of the race to acquire German pharmaceutical company Merck's generics business on concerns of over-valuation.

Ranbaxy, the only Indian company to have made it to the second round of bidding, decided to opt out after valuations were stretched beyond $6 billion, industry sources said. They added that an auction at this stage could easily take the valuations to over $6.5 billion.

Dr Reddy's Laboratories had pulled out of the race earlier citing over-valuation.

When contacted, Ranbaxy officials declined to comment on the development.

Ranbaxy was being advised by Goldman Sachs and Citigroup on the deal. Global pharmaceutical majors including Teva, Mylan and Actavis had made it to the second round for acquiring the generics business of Merck.

Ranbaxy CEO and managing director Malvinder Singh had said earlier that the company was looking to evaluate the assets and were going to be very practical about it. "We are not in a rat race for acquisition but are focused on creating value for shareholders in the best way we can," he had said early this month.

Merck is hiving off its generics unit to concentrate on branded formulations.