Sun Pharmaceuticals and Ranbaxy Laboratories have jumped the final hurdle in their merger with government approval of a sale of 7 of their branded drugs to fellow India drugmaker Emcure Pharmaceuticals.
A press conference featuring Sun Managing Director Dilip Shanghvi and Sun Chairman Israel Makov in Mumbai on March 25 for said the combined entity would spend more than $300 million in ressearch and development efforts.
"The combined entity will capitalize on the expanded global footprint and enhance our dominance as a world leader in the specialty generics landscape, Makov told reporters in Mumbai.
Postmerger, Daiichi Sankyo becomes the second-largest shareholder in Sun Pharma and both companies will work together to leverage this relationship for global business growth, the company said.
"It also increases our ability to spend on R&D. Both the companies separately invest something like USD $250 million annually in research. Because of the investment that we are planning for further developing MK 32/22, the product that we licensed from Merck ($MRK) for psoriasis, we would be looking forward to increasing our investment in R&D may be in excess of USD $300 million," Shanghvi said, adding that the Ranbaxy acquisition does not preclude Sun from doing other large acquisitions. He did however state that the company may not appeal a legal judgment for Ranbaxy on Nexium and Valcyte.
The Competition Commission of India (CCI) approved the sale, completing the divestiture it had ordered to avoid giving the merged company excessive control over the India market. All other legal and regulatory hurdles, some of them foreign, already had been cleared.
Sun would sell its Tamlet brand of tamsulosin and tolterodine prostate drugs to Emcure and Ranbaxy its Terlibax, Rosuvas EZ, Raciper L, Triolvance and Olanex.
The value of the drugs was not disclosed, but analysts have estimated it at $8 million. A sale of something of that value usually means the purchase price is double to triple the figure, analysts said.
The CCI said it cleared the sale because Emcure was "a viable and active competitor" of Sun and Ranbaxy. Sun's acquisition of Ranbaxy began a year ago when the parties agreed to a $4 billion buyout from Daiichi Sankyo.
Ranbaxy, whose name has been sullied as the result of quality production problems at several of its plants, is expected to fade into oblivion with completion of the deal. With the acquisition, Sun would become the world's fifth largest drugmaker and India's largest.