Sun Pharma To Buy Ranbaxy: A Huge Step Forward For Modern Pharmaceuticals
Sun Pharma To Buy Ranbaxy: A Huge Step Forward For Modern Pharmaceuticals
Sun Pharma’s $ 3.2 billion purchase of Indian firm Ranbaxy is a step forward for the pharmaceuticals industry. It may not seem like such a wonderful deal due to safety lapses according to US regulators, but this acquisition is a feather in the cap for Sun Pharma. Ranbaxy is being purchased from Japan’s Daiichi Sankyo which is selling the company to Sun Pharmaceuticals this year. When the Japanese pharmaceutical company acquired Ranbaxy in 2008 for $4.6 billion, there were questions regarding how successful the venture would be. When Ranbaxy ran into trouble with the US regulators, few would have deemed it a good choice for acquisition. But Ranbaxy is definitely a company that can be retrieved from its troubles, given the successful track record.
Sun Pharma is skilled in resolving crucial issues and restoring profitability to ailing firms. Investors have also given a huge boost to Sun Pharma because it has the capacity to reap good returns in the global generics market. Currently, the pharmaceutical industry is expanding because consumer demand is on the rise. As the world population grows rapidly, healthcare needs will become more and more important. In such a scenario, companies in the health care industry such as pharmaceutical firms can hope to achieve a lot of success, if they are able to overcome problems. Investors and experts are welcoming the news because Sun Pharma is known for turning around sick companies through effective management.
Sun has also had a lot of experience when it comes to formulating effective drugs for a growing market. US pharmaceutical giants such as Merck have made profitable and beneficial alliances with Sun Pharma in the past. Sun Pharma’s acquisition of Ranbaxy could be a way out of the USFDA troubles this Indian pharmaceutical company is facing.
Ranbaxy is a New Delhi based company which has been facing tough times lately. It has experienced a crunch in profits due to inability to access the US market following issues pertaining to quality control. The US Food and Drug Administration found that there had been safety lapses when it came to the making of certain drugs. There was massive fallout of this and Ranbaxy which is now controlled by Daiichi Sankyo was facing considerable financial pressure. Sun Pharma has come to the rescue of Ranbaxy at just the right time now.
Sun Pharma is a Mumbai based company. It was formed 30 years ago by Dilip Sanghvi. Sun Pharma has a good idea of how to resolve the regulatory woes being faced by Ranbaxy. The huge advantages of purchasing Ranbaxy far outweigh the losses. Sun has now got access to a wider range of drugs because of this acquisition. It also has a robust pipeline for manufacturing medicines. Apart from this, Sun Pharma has also gained access to a wider geographical range with respect to the global medicine market. Sun Pharma will be the fifth largest pharmaceutical company in the field of generic drugs following this acquisition.
Apart from growing in size and capabilities, Sun Pharma will also be able to double or even treble its sales. As it reaches a bigger market, the company will be able to leverage on the know-how of Ranbaxy and market a wider range of medicines. Following its deal with Ranbaxy, Sun Pharmaceuticals will now extend its operation to over 65 firms and 47 plants across different continents.
There is also a huge gap in the fragmented Indian pharmaceutical market. As far as sales are concerned, Sun Pharma will now be the biggest drug-maker in the US. It will also be the largest pharmaceutical firm by Indian standards as it will have a market share of 9.2%. This is far more than its nearest rival Abbott Laboratories which has a market share of 6.5%.
Sun Pharma will also be able to capture larger revenues in emerging markets such as Brazil. Ranbaxy will provide it with a strong platform from which to manage the challenges of being a leader in the pharmaceuticals industry. This is even being seen as a distress sale by Daiichi in some quarters. This in itself is a wonderful advantage for Sun Pharma. Sun may have capitalized on the circumstances but Daiichi will definitely lose due to this deal. As it is with any other aspect of the corporate world, one man’s loss has indeed become another man’s gain.
