Japanese drug giant Daiichi Sankyo plans to record a valuation loss and one-time write-down of goodwill on its investment in group subsidiary Ranbaxy Laboratories for the fiscal third-quarter ended December 31, 2008. Daiichi Sankyo had acquired India’s top pharma company Ranbaxy in June 2008 for $4.6 billion.
On a non-consolidated basis, Daiichi Sankyo plans to record a non-cash valuation loss of $3.9 billion on its shares in Ranbaxy in its fiscal third-quarter to reflect a more than 50 percent decline in the market value of these securities versus the purchase price.
On a consolidated basis, Daiichi Sankyo estimates a non-cash loss of $3.85 billion related to the write-down of goodwill associated with its investment in Ranbaxy in line with the valuation loss on Ranbaxy shares accounted for on a non-consolidated basis.
Daiichi Sankyo sees no impact on its forecasts for non-consolidated net sales, operating income or ordinary income for the fiscal third-quarter as a result of these anticipated extraordinary losses. The company also sees no impact on cash flow. However, these items will have a significant negative impact on the company’s consolidated financial results forecasts for net income for the nine-month period ended December 31, 2008 and for fiscal year 2008 ending March 31, 2009.