Sun-Ranbaxy merger may spill over to 2015

The Competition Commission of India and the US Federal Trade Commission are yet to give their nod to the biggest pharma merger and acquisition deal this year in the Asia-Pacific region

Sun Pharma’s acquisition of Ranbaxy might spill over to 2015 over pending regulatory approvals for the deal, which will create the world’s fifth-largest generic drug maker by sales. The buyout is valued at $3.2 billion, but Sun Pharma will also acquire Ranbaxy’s debt of around $800 million, taking the overall transaction value to $4 billion.

After the announcement of its second-quarter results on Thursday, the company management had said in its earnings call that there could be minor delays in the closure of Ranbaxy merger if pending approvals were not received.

“Till date, clearances have been obtained from stock exchanges in India, from shareholders and competition authorities in all applicable markets excluding India and the US. We are expecting to have the pending approvals by December 2014 but there could be minor delays if the approvals do not come by end of December 2014,” the company management had said in its earnings call late on Thursday.

The Competition Commission of India and the US Federal Trade Commission are yet to give their nod to the biggest pharma merger and acquisition deal this year in the Asia-Pacific region.

The deal, announced in April this year, is also seen as a rare purchase of a local rival by a leading Indian company. Sun Pharma scrip closed at Rs 886.50 on the BSE on Friday, 2.5 per cent lower than the previous close.

The management further said that it’s working on the observations made by the Food and Drug Administration on its Halol unit. The firm added that the plant continues to operate.

In September, the US FDA had made a surprise inspection at the generic maker’s Halol unit. Earlier, in May, another manufacturing facility of Sun Pharma at Karkhadi in Gujarat had received a warning letter from the US FDA after investigators identified violations of current good manufacturing practice and regulations for finished pharmaceuticals.

In the recent past, Sun Pharma has recalled three important medicines from the US market - 40,000 bottles of Venlafaxine Hydrochloride extended-release tablets after it failed dissolution test; Gemcitabine for manufacturing issue (lack of sterility assurance); and Metformin for packaging problems (Gabapentin tabs found in Metformin bottles).

For its licensing deal with Merc & Co for a psoriasis drug, the company would make additional investments of about $250 million over five years. At present, the drug is in late-stage trials for use in chronic plaque psoriasis.

Sun Pharma reported a net profit of Rs 1,572 crore (Rs 15.72 billion) for the second quarter of FY15, up 15 per cent from the year-ago period. Net sales stood at Rs 4,750.5 crore (Rs 47.51 billion) for the quarter under review, up by 13 per cent from the same period last year.