BioCentury
ARTICLE | Strategy

Offloading R&D in India

February 25, 2008 8:00 AM UTC

Ranbaxy Laboratories Ltd. last week became the latest Indian pharmaceutical company to demerge its drug discovery activities into a standalone subsidiary. While the company, like others that have taken a similar route, claims that the demerger will create a unit that will be able to leverage and focus the financial resources to accelerate the company's drug discovery ambitions, it is apparent that it is also a short term fix to boost the parent's profitability by hiving off the R&D expense.

Ranbaxy's New Drug Discovery Research unit will be moved into a new subsidiary called Ranbaxy Life Science Research Ltd. (RLSRL). The scheme is expected to result in cost savings of Rs100 crore ($25 million) for the parent company in 2008, a number that is expected to increase significantly in the coming years...