Sun to benefit from Doxil shortage, but CEO eyes deals for bigger growth

With Johnson & Johnson's ($JNJ) cancer treatment Doxil expected to run short till the end of 2014, India's Sun Pharmaceutical Industries stands to gain. To meet demand amid previous scarcity, the FDA allowed Sun's unapproved generic version of the drug to be imported into the U.S. Now, after a fast-track approval process, the drug has the FDA's blessing, and Sun will have the market all to itself, at least for now.

Analysts credit billionaire managing director Dilip Shanghvi with pushing his company into high-tech drug production--"Shanghvi's strategy to manufacture difficult-to-produce drugs paid off with Doxil," one Mumbai analyst told Bloomberg. And such are the moves that Shanghvi has made to grow Sun into one of India's biggest drugmakers, inspiring a sevenfold increase for its shares since 2007.

Shanghvi wants to keep that momentum going, and so he's been scouting for M&A around the world, particularly in liquid injectables, oral solutions and ophthalmology products. In an interview with Bloomberg, Shanghvi said his company evaluates three to fourth buyout targets every month--but no deals are imminent yet. Over the past year, Sun has been linked with possible deals for Sweden's Meda and Germany's Stada.

"Sun is seeking some products that we don't have, or technologies that we don't have," Shanghvi said in the interview, adding, "We are focused on identifying products which will allow us to operate in limited competition markets."

Shanghvi's latest focus on deal-shopping follows 11 transactions since 2001, aiming this time at expanding in Europe and Japan, plus beefing up sales in the U.S. At a time when Indian rivals Ranbaxy Laboratories and Wockhardt are laboring to fix manufacturing violations flagged by the FDA, Sun has passed 7-8 inspections over the past year, Shanghvi told the news service. But that doesn't mean Sun has been trouble-free. Last August, the FDA cleared two plants in Michigan operated by a U.S. subsidiary, Caraco, to make two products under supervision. The plants had been beset by so many manufacturing and recall problems that the FDA sent in U.S. marshals to lock up supplies.

- see the Bloomberg story

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