Ranbaxy CEO sees consolidation wave over 3 years

By Michael Kahn

LONDON, June 18 (Reuters) - A wave of consolidation will hit low-cost Indian drugmakers over the next three years as companies seek global scale to survive, Ranbaxy Laboratories Ltd (RANB.BO) Chief executive Malvinder Singh said on Wednesday.

Ranbaxy's decision this month to accept a takeover offer worth up to $4.6 billion from Japan's Daiichi Sankyo (4568.T) could also make family-held businesses across India rethink the idea of selling to foreigners, he added.

"This might make people revisit their strategies and look at the various options they have to enhance the growth of their organisations," he told Reuters in an interview at the company's London headquarters.

"This (deal) to me is another sign of India's businesses being more integrated globally and recognizing that globalization is a two-way street."

Indian drug makers until recently were on acquisition sprees of their own but are now seen as attractive targets for foreign firms seeking entry to the fast-growing market, their research and development expertise and a low-cost manufacturing base.

Ranbaxy's family-controlled rivals such as Cipla Ltd (CIPL.BO), Dr Reddy's Laboratories Ltd (REDY.BO) and mid-sized Aurobindo Pharma (ARBN.BO) could be potential targets.

The decision to do a deal now made sense because it allowed Ranbaxy to choose a partner from a position of strength, a luxury others may not have if they fail to move quickly, Singh added.

The consolidation will come from more foreign companies seeking a foothold in a growing market as well as domestic drug makers gobbling up each other to grow big enough to compete, he added.