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Business News/ Companies / News/  Ranbaxy FDA compliance to remain high priority for Sun Pharma: Uday Baldota
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Ranbaxy FDA compliance to remain high priority for Sun Pharma: Uday Baldota

Sun Pharma's senior vice-president of finance Uday Baldota, talks about the merger and future plans

The all-stock deal fits well with Sun Pharma’s growth strategy of buying distressed assets cheaply and turning them around. Photo: Mint Premium
The all-stock deal fits well with Sun Pharma’s growth strategy of buying distressed assets cheaply and turning them around. Photo: Mint

The country’s most valuable drug maker Sun Pharmaceutical Industries Ltd on Monday signed a merger agreement with Ranbaxy Laboratories Ltd to form the world’s fifth biggest generic pharma company. The all-stock deal, which will mark the exit of Japanese drug maker Daiichi Sankyo Co. Ltd from troubled Ranbaxy Laboratories, fits well with Sun Pharma’s growth strategy of buying distressed assets cheaply and turning them around. Sun Pharma’s senior vice-president of finance Uday Baldota, who played a key role in the deal, spoke about the merger in an interview. Edited excerpts:

Why did Sun Pharma choose an all-stock deal when it has sufficient cash?

There were lots of options that we could have worked out to consummate the deal. The management decision, that was to involve all the investors in Ranbaxy, including minority shareholders in the growth of the company going forward, has led to the merger deal of this nature.

What will be the immediate impact of the deal on Sun Pharma’s balance sheet?

Ranbaxy had debt of $800 million (around 4,800 crore) as on 31 March 2014. This will come into the Sun Pharma book. Other than this, there isn’t any significant impact on the balance sheet of Sun Pharma, post the merger deal.

Any timeframe for achieving US Food and Drug Administration (FDA) compliance on Ranbaxy’s front?

Predicting the timeframe for these matters is very difficult . In our understanding this is a high priority item for Ranbaxy management and it will remain so for Sun Pharma after closing of the merger.

We have estimated $250 million revenue and operating synergies to be achieved through the deal after three years of the completion of the merger.

What are the market and portfolio synergies for the combined entity?

The portfolio will be substantially broadened for the combined entity in terms of products as well as markets. Many therapeutic segments such as skincare and cardiology, among others, and some of the strong markets of Ranbaxy will significantly add value to Sun Pharma. The combined entity will not only be the world’s fifth largest (generic) company, it will also become the largest Indian pharma company in the US. With a 9.2% market share in India’s 75,000 crore pharmaceuticals market, which is much higher than the current market leader Abbott Laboratories’ 6.5%, the merged entity will be ahead of all its local rivals.

Any important management changes other than Daiichi management representation on Sun Pharma?

Since Daiichi Sankyo will become the second largest shareholder with 8.9% stake post merger, it has the right to nominate a representative on the Sun Pharma board. No other changes in the management and the people are being discussed so far. I feel there is enough opportunity for the existing people in the growth process of the larger entity.

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Published: 07 Apr 2014, 08:32 PM IST
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