Thursday, December 1, 2011

Teva and Ranbaxy agreement - Synergistic or ???

There are worries on the street, in terms of why Ranbaxy tied up with Teva for generic Lipitor and what are the terms of the agreement.  I have a strong feeling that the agreement is synergistic, as Ranbaxy always had the otpion to sell its exclusivity at lucrative terms, which it has not opted for.
It is known that Teva is not supplying active ingredient to Ranbaxy, hence it could be a codistribution agreement and everybody knows nobody can beat Teva in the US on distribution strength.  Ranbaxy has probably tied up with Teva to take Pfizer's head on, as it is stated that it would sell Lipitor at generic prices in the US.  As such Pfizer is not going to get the support of the payors, as it is against their long term interest and some of the payors have categorically stated this thing.
For my calculation on how much Ranbaxy would take home after paying Teva, just read Lipitor Equation for Ranbaxy
The valuations of Ranbaxy are as such defensive and it makes a good bet now