- April 11, 2014
-- It is true that with Ranbaxy’s merger, Sun Pharma will be catapulted to the No. 1 position in the highly fragmented India pharma market. The combined entity will also be the fifth-largest generics company in the world. So, size, scale and synergies can be achieved. But with this merger some analysts have dubbed the move as a game changer for Indian pharma, while others say the two companies do not complement each other in terms of margins, drugs and geographies says Sachin Karpe. Many analysts say Sun Pharma will face a big challenge as far as Ranbaxy's problems with the US Food & Drug Administration is concerned. The FDA has banned imports from all the Indian plants of Ranbaxy over production quality lapses. Sun Pharma chairman Israel Makov is confident that they will be able to get over these problems soon as Sun Pharma is the industry leader as far as compliance is concerned.
Ranbaxy has in the past few months received warnings and withdrawal of approvals from the US regulator, impairing its ability to continue growing in the US. In February this year, Ranbaxy stopped all raw material shipments from its Toansa and Dewas facilities which manufacture API, the basic chemicals that go into medicines, in order to review "processes and controls" at these facilities. This is where Sun will bring in its own strengths to increase productivity and create synergies within the two companies feel Sachin Karpe. The revenue can be increased by crossing products between companies and markets. The acquisition will reinforce Sun's presence in India, where the company was number one in seven therapeutic segments before the acquisition. Now it will be the first in 13 segments. Thanks to Ranbaxy, Sun will be getting a good entry into the acute therapeutic categories. In the US, the merged company will have a much larger presence supplying to key customers
Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. This exchange ratio represents an implied value of Rs. 457 for each Ranbaxy share, a premium of 18% to Ranbaxy's 30-day volume-weighted average share price and a premium of 24.3% to Ranbaxy's 60-day volume-weighted average share price, in each case, as of the close of business on April 4, 2014, according to a release by the two companies. The combined entity will have operations in 65 countries, 47 manufacturing facilities across 5 continents, and a significant platform of specialty and generic products marketed globally says Sachin Karpe.