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Sun Expects $250 Mn Revenue Post Acquisition

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Sun Pharmaceutical Industries still expects $250 million revenue and operating synergies by third year post the acquisition of Ranbaxy Laboratories, according to Dilip Shanghvi, Managing Director.

“We have not done any post-due diligence of Ranbaxy and it is currently run by its old management. We have initiated an integration process and discussions are on with various teams”, he said, in a conference call with analysts to discuss the first quarter 2014-2015 results of Sun Pharma.

In April-2014, Sun Pharma had proposed the acquisition of Ranbaxy Laboratories in an all-stock deal valued at an enterprise value of about $4 billion. The deal is likely to be concluded by the end of this year, provided the company gets all the clearances.

Read Also: What The Sun-Ranbaxy Synergy Will Mean

Ranbaxy's sales were down from Rs 2,583 crore in the first quarter of FY 2014 to Rs 2,372 crore in the first quarter of the current financial year, with a net loss of Rs 185.9 crore. The company also has a net debt of $846 million.

Shanghvi said till date the company has received clearances from the stock exchanges in India and from anti-competition authorities in all applicable markets, excluding India and the US. Besides, the merger requires approvals from multiple regulatory agencies and the respective shareholders of both the companies.

Commenting on the chances of Competition Commission of India (CCI) interfering in the deal to avoid monopoly in the local market, Abhay Gandhi, CEO, India Business of Sun Pharma, said the representatives of the company has already given their views to the CCI. “We and the CCI are committed to better access of medicines to the Indian patient and it is not fair for us to comment at this time as the issue is before the CCI”, he said.

If the deal is approved by the CCI, the newly combined entity of Sun Pharma and Ranbaxy will command a market share of over 9 per cent with sales of approximately $1116 million from the domestic market, say analysts. Experts point out that Sun Pharma and Ranbaxy currently have 128 common formulations and after the merger, Sun Pharma will have a market share of over 40 per cent in the market for about 25  drugs. Out of these 25 drugs, nine drugs command a market share of more than 65 per cent and will range between 40-60 per cent in the market of the other 15 drugs.

Shanghvi said currently Sun Pharma has a cash balance of about Rs 12,000 crore and will look at suitable opportunities for acquisition. He said the recent acquisition of US based sterile injectable manufacturing facility Pharmalucence is performing in line with the expectations of the company.