Ranbaxy follows Sun Pharma in demerging R&D business

In the last couple of months, prior to the announcement by Ranbaxy Laboratories announcement on hiving-off its R&D division, (See: Ranbaxy plans to spin off research arm as Q3 net profit zooms 48 per cent) analysts had been predicting the move for the past few weeks, reports CNBC-TV18.

Analysts say Ranbaxy happens to be the largest spender on research and has a couple of products in advanced stages of clinical development.

They point out that the company''s anti-malarial drug is supposed to hit the market by 2010-11. According to the company''s management, the product is good. However, the tie-up with Geneva-based product company, MMV, was broken-off a couple of weeks back.

>The pharma major has a couple of good platform technologies and novel drug delivery systems, which could be used on a lot of products may be for extended release or meter dosages. This also happens to be a very good revenue driver if it is taken forward in terms of clinical trials. So, it looks to be a good way to separate the entire R&D, they added.

>The same philosophy works for Sun Pharma, analysts point out. Sun Pharma felt that there were two types of shareholders - one which prefers a long-term view of R&D pipelines and the other which looks at the operational efficiencies of the core company, which could be Ranbaxy in this case.

>So, the two divisions will be separated. It will be a delisting and a complete listing of their R&D, as reported yesterday. This is in contrast to what private equity players have to say. So, they will go for a full-fledged listing of their R&D entity.

>Before Sun Pharma''s SPARC was listed, the company was valued at about $400 million by Merrill Lynch. It had a couple of products that were already available in the market. The company also had novel drug delivery systems, analog of cetirizine and gabapentin, and a couple of metered dosages.

In the case of Ranbaxy, apart from malarial products, all its research is focussed on chronic-disease products. It has drugs for metabolic disorders and diabetes. It also has DPP-4 which was worked upon by Glenmark and was licensed to Merck a couple of months ago, ie GRC 8200.

According to these analysts, it looks to be a strong pipeline but there are no certainties with pipelines. A couple of products may collapse in phase-II or phase-III trials. But to have a pipeline of about 8-10 products in all, works well for a company to go ahead and do some licensing deals, they added.