Sun Pharma to buy Ranbaxy in $3.2 bn deal
Sun Pharmaceutical Industries Limited acquired Ranbaxy Laboratories Limited (owned by Japan’s Diiachi Sankyo) in an all-share deal with total equity value of $3.2 billion. Earlier in 2008, Daiichi Sankyo had bought Ranbaxy Laboratories for $4.6 billion. In the combined entity, promoters of Sun Pharma will hold close to 56% while Daiichi Sankyo will hold 9% stake .
Why acquisition of Ranbaxy is an important Strategic deal for Sun Pharma?
Sun Pharma has strong presence in US markets while Ranbaxy has strong presence in Emerging Markets and Rest of World markets. In India, the Sun Pharma is strong on Chronic side while the Ranbaxy is strong on Acute side. The combined entity SUN + Ranbaxy will now be the 5th largest generics company in the world and the largest Pharmaceutical Company in India.
The Top 4 names in the World in Generics are: Teva, Actavis, Sandoz and Mylan.
Sun Pharma and Ranbaxy are competitors in Indian as well as US Market. With the acquisition of Ranbaxy, Sun Pharma plans a phase out sales of generic drugs branded as ‘Ranbaxy Laboratories Ltd products’ in the US market. The Ranbaxy products will be rebranded as Sun Pharma treatments in the US market.
Sun Pharmaceutical Industries Limited: Indian multinational pharmaceutical company that sells pharmaceutical formulations and active pharmaceutical ingredients (APIs) primarily in India and US.
- Founder: Dilip Shanghvi
- Founded: 1983, Mumbai
- CEO: KalyanaSundaram Subramanian
- Headquarters: Mumbai, Maharashtra, India
Ranbaxy Laboratories Limited: Indian multinational pharmaceutical company that was started by Ranbir Singh and Gurbax Singh (RanBaxy name is a portmanteau of the names of its founders) in 1937 that sells its products to 125 countries.
- Founders: Ranbir Singh and Gurbax Singh
- Founded: 1937
- Incorporated in: 1961
- CEO: Arun Sawhney
- Headquarters: Gurgaon, Haryana, India
- 1952: Bhai Mohan Singh bought the company from his cousins Ranbir and Gurbax Singh.
- 1961: Incorporated in India
- 1967: Parvinder Singh (son of Bhai Mohan Singh) joined and from here the company saw a huge increase in scale.
- Acquisition: In 2008, Japanese pharmaceutical company Daiichi Sankyo acquired 63.92% stake in Ranbaxy
Highlights of the Sun Pharma – Ranbaxy Merger:
- Daiichi Sankyo sold its entire 63.4% share in Ranbaxy to Sun Pharma
- Acquisition is an All Stock Transaction (All Share Deal)
- Ranbaxy shareholders get 0.8 shares of Sun Pharma
- Value of each Ranbaxy Share as per deal = Rs 457
- Daiichi will hold 9% in merged entity
- Daiichi will have one board member
- Daiichi will become second largest shareholder in Sun Pharma
What is a Generic Drug?
A Generic Drug (or Generics): A drug product that is available as a substitute (as it is conforming in every respect) to brand/reference listed drug product in strength, route of administration, dose form, character and performance and meant usage. A Generic Drug is also many a times referred to any drug which is marketed under its chemical name free from any advertisement or publicity.