Post deal, Ranbaxy brand may face the axe

Apr 14 2014, 11:23 IST
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SummaryThe possible phasing out of the Ranbaxy brand is, by no means, an exception. A majority of global pharma mergers too have marked a similar trend.

Even as Sun Pharma MD Dilip Shanghvi has stated for the record that the company is yet to take a final call on the fate of brand Ranbaxy post its $3.2 billion acquisition deal, the street view is that it could well be the end of the road for the half-a-century old brand.

Despite the numerous dents to its reputation, Ranbaxy still marks India’s entry in the global pharma sweepstakes and is still considered to be the country’s first blue-blooded pharma flagship. The deal with Sun, though, is likely to see a sunset clause when the fineprint is laid out.

The possible phasing out of the Ranbaxy brand is, by no means, an exception. A majority of global pharma mergers too have marked a similar trend, where the market identity of the acquired has been progressively subsumed by the acquirer, including Wyeth’s acquisition by Pfizer and MSD (Merck’s name outside the United States and Canada) buying Schering-Plough. Earlier, Pfizer had subsumed two of its other acquisition targets — Warner-Lambert and Pharmacia — to become the world’s largest drug maker. While the Ranbaxy brand is likely to face the axe, the consensus view is that the consumer sub-brands of Ranbaxy might be retained by Sun.

The sub-brands would be retained precisely because the end-consumer is unlikely to recall the corporate brand under which they are being offered. But to thwart the heat on Ranbaxy, Sun might have to give some sort of reassurance about the quality to the other stake-holder that are key to the pharma business — doctors. In export markets such as the US and the EU, the Ranbaxy brand would certainly be a hindrance for Sun in the wake of negative rulings by the US FDA and therefore a phasing out of the sullied brand umbrella could seem the most plausible course of action.

There is yet another dimension to Sun’s acquisition of Ranbaxy Labs. In 2008, when Japan’s Daiichi Sankyo bought Ranbaxy, it was seen as a big step towards the ‘multinationalisation’ of India’s largely homegrown generics-dominated pharma sector. That the Ranbaxy deal came at a time when a number of other high-profile deals happened as well — US-based Abbott Labs and Hospira buying Piramal Healthcare and Orchid Chemicals respectively, France’s Sanofi-Aventis’ purchasing Shantha Biotechnics, American firm Mylan buying Matrix Laboratories and Germany’s Fresenius Kabi buying out Dabur Pharma — just buttressed this view. Ranbaxy’s transfer back to Indian hands should

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