Ranbaxy raises $400 million from FCCB issue
By The bonds have a matur | 16 Feb 2006
The bonds have a maturity of five years and carry no interest. They can be converted into equity shares on maturity at a premium of 60 per cent to yesterday's closing price of Ranbaxy. Based on yesterday's closing price on the BSE, the conversion price works out to Rs716.32 per share.
The company has aggressive plans for the future including domestic and overseas acquisitions. Ranbaxy has set a revenue target of $2 billion by 2007 and $5 billion by 2012. The company management has repeatedly said a significant part of revenue growth would come from acquisitions.
In a statement to the stock exchanges yesterday, Ranbaxy said it is constantly looking at potential acquisition targets. The company said it had bid for a German drug company without revealing the identity of the target company. It is very likely that Ranbaxy was referring to Betapharm, which Dr Reddy's this morning said it is acquiring for €480 million.
Ranbaxy is expected to spend the money raised from the FCCB issue on acquisitions and product development. The company has one of the longest product pipelines among Indian companies, currently under trials.
Ranbaxy's financial performance had deteriorated considerably over the last few quarters as generic drug prices in the key US market has declined considerably. The company also had to significantly increase legal expenses to challenge patent extensions on major drugs which are going off-patent.
The company's efforts to challenge patent extensions have had mixed results so far. Its legal battle against global major Pfizer for cholesterol lowering drug Lipitor has been the most high profile one as Lipitor is the single largest selling drug globally. A final verdict on the case is expected in the US later this year.
Ranbaxy is trading at Rs439.5 (down 1.83 per cent) at 12.35 PM one the NSE today.