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Sun Pharmaceutical's Ranbaxy buy may get delayed

Company sees minor delays as approvals from US and Indian fair trade regulators and Indian courts are pending, deal may get pushed to next year

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Pharma major Sun Pharmaceutical Industries on Thursday said its acquisition of Daiichi-owned Ranbaxy Laboratories may get delayed if pending approvals do not come through December this year.

Dilip Shanghvi, managing director, Sun Pharma, said during an earnings call, "We are in the process of obtaining various regulatory approvals for this merger. The process of obtaining approvals from US Federal Trade Commission and Competition Commission of India are ongoing, and the merger also requires approvals from the Indian courts. Although our target for the closure of the transaction is by December 2014, it can lead to minor delays to this timeline if any of the pending approvals do not come through by 2014."

The company also reported a 13% growth in its consolidated net sales for the quarter ended September 30 at Rs 4,751 crore. Net profit during the quarter grew 15% to Rs 1,572 crore while operating profit rose 18% to Rs 2,161 crore.

In April 2014, Sun Pharma had proposed the acquisition of Ranbaxy Laboratories in an all-stock deal valued at an enterprise value of about $4 billion. This buy requires approvals from multiple regulatory agencies and the respective shareholders of both the companies. Clearances have been obtained from the stock exchanges in India, shareholders and from competition authorities in all applicable markets excluding India and the US.

The deal is currently awaiting approvals from US FTC, CCI and the Gujarat, Punjab and Haryana High Courts.

Sun's sales in the US during the quarter under review were $481 million for the quarter, a rise of 15% and accounting for 61% of total sales. "The growth in the overall US sales came despite loss in the generic branding exclusivity and significant decline in doxycycline sales. The growth is driven by Taro's performance in the US market," said Shanghvi.

Taro recently posted its second quarter sales of $251 million, a jump of 22% from the corresponding quarter last year, while its net profit for the second quarter was up 49% at $143 million. Formulation sales in international markets excluding US accounted for $89 million in the second quarter, registering a growth of 12% (in dollar terms). Overall international revenues accounted for about 75% of total revenues for the quarter.

Sale of branded prescription formulations in India during the quarter was Rs 1,152 crore, up by 21% over the corresponding period last fiscal, against the industry growth of around 11%. Sun launched six products in the Indian market during the reporting quarter.

Sun said it is committed to achieve 100% compliance in regards to its Halol facility which was recently inspected by the US Food and Drug Administration (FDA) and raised a certain observations. "Post inspection, the FDA made certain observations, for which corrective steps are underway. No more specific detail can be shared on this at the moment," Shanghvi said.

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