Ranbaxy Daiichi Deal

Japan's Daiichi struck an agreement this week to pay up to $4.6 billion for control of Ranbaxy, securing it access to India's biggest maker of generic medicines, as well as a stronger position in emerging markets.

Daiichi, however, was not the only branded drugmaker in discussions with Ranbaxy. British-based Glaxo also showed keen interest, the sources said.

Officials at Glaxo and Ranbaxy declined to comment.

Glaxo, the world's second-largest drugmaker, already has an established relationship with Ranbaxy, through a drug discovery and clinical development alliance.

Glaxo's new CEO Andrew Witty has also made clear in recent weeks that he plans to make emerging markets a key area for future growth.

"There is a realisation that the business model may need to change and that actually being in generics can open up new markets," said one source.

Indian television channel CNBC-TV18 reported that Glaxo had offered 770 rupees per share for control of Ranbaxy -- more than Daiichi -- but its offer was linked to conditions that stalled the process.

Daiichi is to buy the 34.8 percent controlling stake held by Ranbaxy's founders, the Singh family, for 737 rupees per share. It will also make an open offer for up to a further 20 percent of Ranbaxy shares.

CNBC-TV18 added that Sanofi-Aventis SA of France was also a potential bidder at one stage but then dropped out.

The deal between Daiichi, a traditional branded drugs firm, and Ranbaxy took many in the industry by surprise, since most big branded drugmakers, with the notable exception of Switzerland's Novartis AG have shunned the generics sector.

Some analysts believe the Ranbaxy Daiichi deal could be a sign that things are now about to change.

Acquiring companies making low-cost, off-patent generics could help large drugmakers diversify at a time when their core markets in Europe and the United States are under pressure and many blockbuster drugs are losing patent protection.