Benefit of Ranbaxy deal to accrue in few years: Sun Pharma

It will take a ‘few years’ for Sun Pharma to realise the benefits of its $4 billion takeover of Ranbaxy, said the company's Chairman Israel Makov, terming the deal as a ‘complex and large acquisition’.

Sun will leverage on complementary functional strengths to achieve topline growth and gains through both revenue enhancement and operational synergies, translating into higher margins, greater market share and more profits through the takeover of Ranbaxy, he said.

"Ranbaxy is a large and complex acquisition and it will take us a few years to fully realise the above benefits," Markov said while addressing the shareholders last week.

He added that Sun has robust track record of turning around its acquisitions into success stories.

The proposed acquisition is expected to close by the end of 2014, subject to approvals from Indian Courts and the anti-trust body in India and the US, Makov said.

"This landmark transaction has the potential to create significant value for shareholders of both the companies in the long term. . . . The merged entity will emerge as the world's 5th largest specialty generic company with strong presence in India, emerging markets and the US," Makov said.

He added that the relatively low share of Indian firms in the US generics market implies good long-term potential.

"Post the closure of the Ranbaxy acquisition, Sun Pharma will become the largest Indian supplier of pharmaceutical products to the US market," Makov said.

Sun Pharma Managing Director Dilip Shanghvi said the combination with Ranbaxy in the US will result in pro-forma revenues of about $2.2 billion based on 12-months ended December 2013.

"The merged entity will become No.1 in the generic dermatology market and No 3 in the branded dermatology market," he added.

On the key challenges facing the company, Shanghvi said as the company grows its international business, regulatory compliance, maintaining quality standards and retaining talent remain critical to the Sun Pharma's sustained performance.

"Pharmaceutical regulation is evolving rapidly around the world, both in the developed and developing countries.

Regulatory agencies continue to raise quality standards, implying that companies will have to continuously improve quality systems and processes to remain complaint," he added.

The Sun Pharma scrip closed at Rs 834.20, up 3.36 per cent, on the BSE.

Shanghvi said that in May one of Sun Pharma's units executed a settlement agreement with Novartis regarding its patent challenge filing for a generic version of Gleevec, used for the treatment of chronic myeloid leukemia and has annual sales of about $2 billion in the US market.

"As per the settlement, Sun Pharma's subsidiary will be able to launch its generic version in the US market in February, 2016," he added.

Further, the company is in the process of gradually increasing the penetration of its DUSA's portfolio with US dermatologists.

Sun had acquired DUSA Pharmaceuticals for $230 million in 2012.