INTRODUCTION

Sun Pharmaceuticals

Sun Pharmaceuticals was established by Mr. Dilip Shanghvi in 1983 in Vapi with Five products
to analyze sickness. It is an Indian Multinational Pharmaceutical Company headquartered in
Mumbai, Maharashtra. It manufactures and sells pharmaceutical formulations primarily in India
and the United States. Today it has asset of US$23 billion. It is the largest chronic prescription
company in India and a market leader in psychiatry, neurology and cardiology. The company has
strong skills in product development, process chemistry, and manufacturing of complex dosage
forms and active pharmaceutical ingredients (APIs). Over 72% of Sun Pharma sales are from
markets outside India, primarily in the US. Manufacturing is across 26 locations, including plants
in the US, Canada, Brazil, Mexico, and Israel. Sun Pharma was listed on the stock exchange in
1994. Today Sun Pharma is the 5th largest global specialty generic pharma company. Sun Pharma
acquired Ranbaxy in 2014 which made it one of the top 10 pharmaceutical companies in India.

Ranbaxy Laboratories Limited

Ranbaxy is an Indian multinational pharmaceutical company that was incorporated in India in

1961. In 1973 a Japanese pharmaceutical company Daiichi Sankyo acquired a controlling share
in 2008. By end of Dec 2010, the company’s global sales were US$1,178 million, with overseas
markets accounting for 75% of global sales. It is an integrated, research based, interactional
pharmaceutical company producing a wide range of quality, affordable generic medicines,
trusted by healthcare professionals and patients across geographies. Ranbaxy’s continued focus
on R & D has resulted in several approvals in developed and emerging markets, many of which
incorporate proprietary Novel Drug Delivery Systems and technologies developed at its own
labs. The company has further strengthened its focus on generics research and is increasingly
working on more complex and specialty areas. Ranbaxy serves its customers in over 150
countries and has an expanding international portfolio of affiliates, joint ventures, and alliances,
ground operations in 43 countries and 21 manufacturing facilities spread across 8 countries.
Daiichi-Sankyo to become the second largest shareholder in Sun Pharma. Strategic business
relationship to continue with Sun Pharma.

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 Acquisition of Both

 In one stroke Sun Pharmaceuticals has doubled its

size in a cashless transaction by acquiring one of
India’s largest pharmaceutical companies – Ranbaxy
in a $3.2 billion all-share deal, creating the world’s
fifth-largest generic drug maker from two firms
struggling with quality issues in the lucrative United
States market.
 Sun Pharma took more than 30 years to achieve
(inception in 1983) its present turnover and a single day to achieve the same turnover through
this acquisition. The beauty of the transaction lies in the fact that a bigger sized company has
been acquired without paying anything for it (in absolute rupee terms). The deal is a cashless
share swap one where Ranbaxy shareholders get 80 shares of Sun Pharma for every 100
shares they own.
 Sun Pharma acquired a larger company Ranbaxy with a turnover of Rs 12,410.43 crore
(March ending 2013).
 On 2014 Sun Pharmaceutical and Daiichi Sankyo jointly announced the sale of the entire
63.4% share from Daiichi Sankyo to Sun Pharma.
 $4 billion all share deal. Under these agreements, Shareholders of Ranbaxy, were to receive a
0.8 share of Sun Pharmaceutical for each share of Ranbaxy.
 After this acquisition, the partner Daiichi Sankyo was to hold a stake of 9% in Sun
Pharmaceutical. The combination of Sun Pharma and Ranbaxy created the 5th largest
specialty generics company in the world and the largest pharmaceutical company in India.
 Diminution in the value of its investments and a loss on foreign currency option derivatives.
Thus, the merger of the company with Sun Pharma comes at a crucial time when Ranbaxy is
struggling to improve its financial position.

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Strengthened Global Footprint

India’s Largest Pharma Company

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Successful track record of turning around

Advantages
 The merger will see Sun Pharma’s revenue jump by a healthy 40% but its operation profit
will rise by a merger 7.5%, based on pro forma 2013 financials. Its operating profit margin
will decline from 44.1% to 29.2%.
 In terms of size, Sun Pharma will now have pro forma 2013 revenue of Rs. 25,911 cr. and an
operating profit of Rs. 7,577 cr. with a net profit of Rs. 1,710 cr.

Future plans & Activities after merger

 Daiichi Sankyo Co. Ltd. (25th march 2015=501.50)

 Takeover of Taro
 Split of its R & D Department ( Rs. 1 Share )
 Concentration more toward USA
 Plans to Acquire Oral & Injectable Business
 Share price of Sun Pharma today

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Conclusion
The valuation of Ranbaxy is attractive at this point in time when USFDA and regulatory issues
are at a peak. Sun Pharma has followed a strategy of acquiring poorly performing companies and
turning them around. Hence, the success of the deal would depend on how quickly Sun Pharma
is able to resolve the regulatory issues of Ranbaxy, improve the operating margins of Ranbaxy
and achieve the synergies. The merger won’t have too many cultural and integration issues since
both companies are Indian. Besides, an all-stock deal, Sun Pharma has also been able to avoid
any open offer possibility to the minority shareholders. Given the large diversified operations of
Ranbaxy and potential synergy benefits, we find the transaction more value accretive for Sun
Pharma shareholders.

Thank You…..

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