Sun Pharmaceutical to acquire Ranbaxy- The pros and cons

Sun Pharmaceutical to acquire Ranbaxy- The pros and cons

Sun Pharmaceutical Industries is going to acquire Ranbaxy Laboratories in deal worth $3.2bn. The deal also takes in to account the debt of Ranbaxy. In all the deal is going to cross over USD 4 billion. It is going to be one of the most talked about deal in pharmaceutical space. Let us see what are the pros and cons of the deal?

Pros

• The deal will result in largest pharmaceutical company in India and will become world's fifth-largest generic drug maker entity.

• Ranbaxy was already struggling with many core issues. The proposed synergies and FTFs (first-to-file) makes the deal lucrative.

• The shareholders won’t have to face any kind of share dilution by the deal. It can lead to monetization of FTFs.

• Sun Pharma can now use the Ranbaxy strength to enhance the business. Due to the core issues Ranbaxy was unable to focus on it derma products.

• Sun Pharma now have Ranbaxy's strong controlled substance pipeline. It is a rewarding opportunity for Sun Pharma and the investors.

Cons

• The deal has crossed the USD 4 billion mark and it is because Sun Pharma has to deal with the Ranbaxy’s debt.

• Sun Pharma has to find out new ways to reduce the high overheads that can eventually lead to improve profitability in business.

• Sun Pharma has to check out the FDA issues that are linked with Ranbaxy.

• Sun Pharma has to improvise on the strategies to make profits from the emerging markets as Ranbaxy is not fairing well in most of the emerging markets including Romania.

• Presently the deal amount will restrict Sun Pharmaceuticals from investing in any other major projects and opportunities in the US markets.

Conclusion

It is one of the best deals in the pharmaceutical industries. It will result in the largest pharmaceutical company in India. The company can spread its operations in many other countries. In all small pitfalls are there bit overall the deal looks impressive.