EXIT MODE

Mumbai, March 20: Ranbaxy Laboratories is understood to have pulled out of the race to acquire the generic drug business of Merck KgaA on concerns of over-valuation. This leaves companies like Teva Pharmaceutical Industries, Mylan Laboratories and Actavis in the race for Merck Generics, whose valuation is expected to be at least $6 billion.

Ranbaxy was the only Indian company to have cleared the first round of bidding and is believed to have withdrawn from the race after indications that an auction could take the valuations to over $6.5 billion.

Hyderabad-based Dr Reddy’s Laboratories had earlier pulled out of the race citing over-valuation. Cipla was another Indian company interested in acquiring Merck Generics. It had aligned with some private equity firms, but the company could not make it to the second round. Though there are reports that Torrent Pharmaceuticals has also teamed up with private equity firms to bid for Merck Generics, this could not be confirmed.

When contacted, an official of Ranbaxy declined to comment due to a confidentality agreement. “I cannot confirm or deny the matter,’’ an official pointed out. Ranbaxy was being advised by Goldman Sachs and Citigroup on the deal. Bear Stearns is looking at the sale on behalf of Merck.

Ranbaxy CEO and managing director Malvinder Singh had earlier given indications that the company will not be aggressive in its bid for Merck Generics when he said the company was evaluating the assets and would be practical about it.