Why Ranbaxy fancies Orchid
14 April 2008
With Ranbaxy said to be eyeing the world's fifth largest maker of the antibiotic cephalosporin, what are the options before the K Raghavendra Rao-promoted Orchid Pharmaceuticals & Chemicals? By Sourya Biswas.
Consider the following scenario: Bill Gates, fresh out of Harvard, incidentally without graduating, has already decided on creating Microsoft. However, hard-pressed for funding, he decides to raise funds from the open market and lists Microsoft right at its inception. To survive in the nascent computer industry, he decides to liquidate most of his personal stake in the company to raise money, and manages to increase its revenues twenty-five times within a decade.
However, IBM, the reigning emperor of the computer world, is not happy with the emergence of a pretender to the throne. Nor is it enthralled by the fact that though it enjoys a monopoly on computer hardware, it does not yet have a killer software product. And so, it plans a sneaky counter-attack.
It creates an entity, lets say Takeover Inc, specifically for taking over Microsoft, which waits and watches for the right opportunity. As soon as it finds that there is a general economic downturn and Bill Gates has a lot of debt, it strikes! Share prices are low due to the fall in stock markets worldwide, and Takeover buys a lot of Microsoft shares cheap. Eventually, it convinces institutional investors in Microsoft that the kind of money IBM can offer for their shares is much more they can hope to get in the next few years by staying on with Gates.
They agree and sell out. IBM becomes the new owner of Microsoft and shunts out Bill Gates. End of Microsoft. End of Bill Gates. End of Windows.
Many Mac users will say that wouldn't necessarily be a bad thing, but all criticisms of frequent hang-ups and blue screens of death notwithstanding, Windows still runs more than 90 per cent of the world's computers. And without Bill Gates and his Windows, computers wouldn't be as ubiquitous as they are today. In fact IBM chairman Thomas Watson had once predicted "I think there's a world market for about five computers."
A possible alternate history, though quite a bit dramatised. However, something similar is playing out right now in India, and in quite a different sector of pharmaceuticals. Just replace the names - Kailasam Raghavendra Rao for Bill Gates, Orchid Chemicals & Pharmaceuticals for Microsoft, Ranbaxy for IBM, cephalosporin for Windows and Solrex for Takeover Inc, and you have a perfect match.
