Sun Pharma has bought Ranbaxy for $4 billion to create the world’s fifth-biggest generic drugmaker.
The move will make the company the largest pharma firm in India, while Daiichi Sankyo – majority owner of Ranbaxy – will become the second largest shareholder in Sun Pharma with a 9% stake and the right to nominate one director to Sun Pharma’s Board of Directors.
The combined entity will have operations in 65 countries, 47 manufacturing facilities across five continents, and will generate revenues of an estimated $4.2 billion. The acquisition will increase exposure to emerging economies such as Russia and Brazil, while also bolstering Sun Pharma’s commercial and manufacturing presence in the US and India. The transaction will also help Daiichi Sankyo’s earnings.
As part of the transaction, Sun Pharma intends to leverage the human capital that has supported both companies in order to drive future growth.
Under the terms of the agreement, Ranbaxy investors will get 0.8 share in Sun for every one of their shares.
Ranbaxy’s shares rose on the back of the news – a positive after the drugmaker has been under scrutiny from the US Food and Drug Administration, with four Indian plants banned from exporting to the US for failing to meet standards. The firm has also recently received a subpoena from the US Attorney for the District of New Jersey for certain documents relating to issues at the Toansa, North India, facility, and it was forced to recall some batches of its generic cholesterol-lowering drug in March.
Dilip Shangvi, founder and managing director of Sun Pharma, believed the two companies complimented each other. “Ranbaxy has a significant presence in the Indian pharma market and in the US where it offers a broad portfolio of ANDAs and first-to-file opportunities. In high-growth emerging markets, it provides a strong platform, which is highly complementary to Sun Pharma’s strengths. We see tremendous growth opportunities and are excited with the prospects to create lasting value for both our shareholders through successful combination of our franchises.”
The agreement still needs shareholder and regulatory approvals.
