Mumbai-based Sun Pharma will acquire troubled Indian drug maker Ranbaxy in a US$ 4 billion all-stock transaction, the company said in a statement on Monday. The merger between the two companies will create India's largest pharmaceutical company and the world's fifth largest generics company.
Ranbaxy, India's biggest company by sales, is controlled by Japan's Daiichi Sankyo. All of its local units have been under the scanner of the US Food and Drug Administration for manufacturing violations. Currently, Ranbaxy cannot export generic drugs to the US, which is its most important market.
Dilip Shanghvi, Managing Director of Sun Pharma said, "In high-growth emerging markets, it provides a strong platform which is highly complementary to Sun Pharma's strengths. We see tremendous growth opportunities and are excited with the prospects to create lasting value for both our shareholders through a successful combination of our franchises."
Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. The exchange ratio represents an implied value of Rs 457 for each Ranbaxy share.
Indian drugmakers are among the world's biggest producers of cheap generic medicines. Demand for generics is on the rise as the United States battles rising health-care costs and as more big-selling branded drugs go off-patent in western markets.