Dilip Shanghvi. Reuters picture.A year after it acquir

Dilip Shanghvi. Reuters picture.

A year after it acquired New Delhi-based Ranbaxy Laboratories from Japan’s Daiichi Sankyo for close to $4 billion (around Rs 24,000 crore), Dilip Shanghvi-led Sun Pharmaceutical Industries has said that it has completed the merger of the two companies. The merged Sun Pharma, with total revenues of $4.5 billion (Rs 27,856 crore), will be the largest pharmaceutical firm in India and the fifth
largest generics company in the world, joining the list of giants such as Teva, Sandoz, Mylan and Abbott. Over $2 billion of that revenue comes from the US, and international revenues comprise 75 per cent of total revenues. The company now employs 30,000 people, and Shanghvi, who is Managing Director, ruled out any immediate restructuring among the workforce that would lead to lay-offs.

Ranbaxy is likely to be delisted from the Indian Stock Exchanges by April. Its shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. Investors welcomed the completion of the merger, with Sun Pharma shares rising 1.29 per cent on the Bombay Stock Exchange to close at Rs 1,053.30 on Wednesday, while Ranbaxy shares were up 1.63 per cent to close at Rs 832.90.

“The merger has created a combined entity which has much more managerial capability. We will look to retain and nurture the talent,” Shanghvi, who pipped Reliance Industries Chairman Mukesh Ambani as India’s richest person earlier this month, said at a media conference. However, he did not comment specifically on the role of Arun Sawhney, Ranbaxy’s CEO & MD but only said the people reporting directly to Shanghvi have already been identified, and others could be accommodated in new roles. Synergies from the merger total $250 million (Rs 1,500 crore), he said, that would be achieved over a period of three years.

The combined entity’s manufacturing footprint covers five continents with products sold in over 150 nations with a stronger presence in the US, India, Asia, Europe, South Africa, CIS & Russia and Latin America. Sun Pharma now offers a large basket of specialty and generic products encompassing a broad range of chronic and acute prescription drugs as well as a ready foray into the global consumer healthcare market. Post-merger, Daiichi Sankyo becomes the second largest shareholder in Sun Pharma.

“This is a springboard to growth on the global front,” said Israel Makov, Sun Pharma Chairman, over a video conference call from Tel Aviv. “We are undertaking one of the largest and most complex integration in Sun Pharma’s history.”

The combination allows Sun Pharma to significantly expand its R&D capabilities and global presence, especially across emerging markets, enhance product portfolio and market depth in India, US as well as Rest of the World markets and improve strategic flexibility, ability to pursue partnerships and strengthen M&A bandwidth. Both companies separately have been spending $250 million in research annually, which would now be enhanced to $300 million.

Talking about the problems that Ranbaxy went through with the US FDA due to lapses in manufacturing quality at some of its plants, Shanghvi said that his focus will be on winning the confidence of regulators. “We will do whatever it takes to build that confidence and trust (with the regulators)” he said. Ranbaxy had been filing 30-40 products annually earlier, but this has slowed down now. ‘We will understand why this has happened, and launch not more generics but differentiated products too,” Shanghvi, whose wealth was valued at over $22 billion earlier this month, said. The consent decree, signed by Ranbaxy in 2012, contains provisions to ensure current good manufacturing compliance at its plants in Paonta Sahib and Dewas. It also has provisions addressing data integrity issues at those two facilities, that have been on FDA import alert since 2008.

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