Now the biggest and most interesting question which arises is WHY? Why a company of the stature of Pfizer would want so desperately to buy a company which have no major patented drugs to its name? What is the profit these companies are looking for in buying a company which only make generic /low cost versions of branded drugs?
The answers to the above questions are as interesting! Pfizer has maintained its lead in the pharmaceutical ground on the success of some of its patented drugs like Norvasc, Lipitor e.t.c. The patent rule allowed it to exercise monopoly on some life saving drugs for HIV and blood pressure. But, now Pfizer finds itself in an awkward position as its major patents are going to last till 2011 only like that of Lipitor and no major drugs are present in its pipeline which can maintain its position. Pfizer wants to increase the patent of lipitor by combining it with Norvasc. But, Ranbaxy seems to be determined in not allowing Pfizer get what it wants. Presently Ranbaxy is contesting legal battle with Pfizer in 17 countries over generic versions of patented drugs. Moreover, Ranbaxy is one of the major players in the Generic drugs market and can run away with all the booty because of its low cost and good quality. For an instance , HIV drug for one patient for one year costs approximately $10,000 for branded drugs as compared to the $ 100 for generic version from Ranbaxy.
Thus from the above facts, we can easily deduce the actual motive behind the rumoured hostile bid by Pfizer for Ranbaxy. The obvious reasons seems to be that Pfizer wants to kill the competition and hostility from Ranbaxy by buying it. The other reason can be that it wants to enter the generic market by utilising the Ranbaxy's low cost model. This is very much a possibility as other branded drug manufacturer like Nvartis have already entered the generic drug market, and Ranbaxy can help Pfizer establish a solid base for building a larger generic drug business.
So, now it will be very much interesting to see in which direction the ball will roll. One one hand the deal would mark a giant leap for the Japanese Sankyo to 12th position in pharmaceuticalfield with presence in over 56 countries, on the other It will mark the entry of a Branded major into Generic drug business. Whatever be the case, lets all hope that the generic drug business is not affected as this serves as a lifeline for many poor countries which can not afford the costly drugs made by companies like Pfizer.