In one of its first acts as India's new leading drugmaker, Sun Pharmaceutical announced the beginning of the end of Ranbaxy Laboratories by removing the company from the stock markets after trading has ended on April 1.
The following week, Sun plans to take steps to move Sun shares over to Ranbaxy stockholders as part of the $4 billion acquisition deal reached a year ago, almost to the day. Over the following months, Ranbaxy is expected to begin disappearing in several other ways.
|Sun Pharma Managing Director Dilip Shanghvi|
Sun also seemed to be saying at a news conference that if Asia thought the largest merger of its kind on the continent was something, wait until you see Sun's future deals. Managing Director Dilip Shanghvi told reporters the Ranbaxy deal did not finish Sun's acquisition focus and that it would be looking for other large deals.
The original deal called for Ranbaxy shareholders to receive shares of Sun at the rate of eight-tenths of a Sun share for every Ranbaxy share held instead of cash. In addition, Sun would absorb Ranbaxy's $800 million in debt.
With the acquisition, Sun could claim a 10% share of India's market and a huge additional interest in other emerging markets.
Even before the merger's completion, Ranbaxy on its own had been reduced to a shadow of its former self. It was almost persona non grata in the United States after the FDA there banned drugs from being imported from four of its India plants. Before that it had been filing more than two dozen applications a year.
Ranbaxy also lost two opportunities to be an exclusive supplier of generics after the U.S. negated its "first-to-file" designations because the ban kept the drugs from the market.
In an interview with the Economic Times, Shanghvi noted that Ranbaxy's once-efficient productivity had declined in recent years. He also suggested that Sun may give up on several legal procedures taken against Ranbaxy and not attempt to get them overturned through appeals or in other ways.
As Ranbaxy fades from the India drugmaking scene, enter Daiichi Sankyo, the Japan-based drug giant that sold Ranbaxy to Sun. Since the deal involved only stock, Daiichi Sankyo is now Sun's second-largest shareholder, second only to Shanghvi.
The Sun founder said the Japanese company was likely to become a working player with Sun, perhaps with Sun marketing some of Daiichi Sankyo's products in India and other countries and otherwise the two companies working in joint operations.