Competition Commission of India (CCI) said on Thursday that the mega deal between Sun Pharmaceutical Industries and Ranbaxy Laboratories is likely to have an adverse effect on competition.
The proposed merger between Sun and Ranbaxy is awaiting regulators' approval.
Sun Pharma, in April this year, announced that it has entered into a definitive agreement with Daiichi Sankyo-owned Ranbaxy Laboratories, pursuant to which the former will acquire 100% of Ranbaxy in an all-stock transaction worth $4 billion, including $800 million debt of Ranbaxy.
As part of the public scrutiny process, the antitrust regulator has now invited comments and objections on the proposed combination. The comments should reach CCI within 15 days, along with supporting documents detailing how the merger can adversely impact the concerned person or entity, the regulator said.
In a notification on its website, the CCI said, "In terms of Section 29(2) of the Competition Act, 2002 (Act), the Commission formed a prima facie opinion that the combination is likely to have an appreciable adverse effect on competition and accordingly directed Sun Pharma and Ranbaxy (parties) to publish details of the combination within ten working days for bringing the combination to the knowledge or information of the public and persons affected or likely to be affected by such combination."
However, CCI has also said that it is unlikely to consider "unstabstantiated objections".
The fairtrade regulator, earlier on August 27, had asked both Sun Pharma and Ranbaxy to make public the specific details of the proposed merger.
Under these agreements, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. Post the proposed transaction, the Ranbaxy shareholders are expected to own approximately 14% of the combined entity on a pro forma basis with Daiichi holding 8.9% and the promoter group of Sun expected to own approximately 54.7% of the combined entity.
The proposed merger would create the 5th largest global specialty generics company. In India, however, the proposed deal has been argued that it will create a monopoly in certain categories where the combined entities has a market share over 15%. The companies have a combined presence in 18 therapeutic areas, 127 therapeutic groups and 246 molecules.
Both Sun and Ranbaxy have shortlisted 37 molecules out 246 molecules where the combined market share of both the parties is greater than 15% and the individual market shares of the each of Sun and Ranbaxy is greater than 5%. Within the 37 molecules there are 2 molecules, Atorvastatin and Losartan, already under National List of Essential Medicines (NLEM).
According to pharma analyst Hitesh Mahida of Antique Stock Broking, there are only 4-5 products where they would have a combined market share of Rs 250-300 crore. "These are mostly cardiac drugs. Even for those drugs where there is overlapping, the market share would be at most Rs 150-200 crore. Besides, the two drugs which under NLEM comes under price control, so there is no chance of a monopoly. There should be a logical reasoning for anyone who objects, as specified by CCI, on why the deal has been opposed to."
The completion of the proposed combination remains subject to the approval of judicial and regulatory agencies including the Hon'ble High Courts of Gujarat and Punjab & Haryana, the approval of the Hon'ble Commission and the approval of the antitrust regulators in the other jurisdictions.
Till date, No Objection Certificates (NOCs) have been obtained from the stock exchanges, NSE and BSE in India, and unconditional approvals have been received from anti-trust authorities in all applicable markets, excluding India and the US. Both the companies expect that the merger of Ranbaxy into Sun would be effective by end of 2014 subject to receipt of the pending approvals for the proposed combination.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}