Sun Pharma’s $11.75 billion Organon bet marks India Inc’s biggest pharma buy

After weeks of anticipation, India’s largest drugmaker Sun Pharmaceuticals Ltd announced the acquisition of US pharmaceutical company Organon & Co. in a deal worth $11.75 billion, in the biggest buyout by an Indian company in nearly two decades.

“I'm happy, excited, and also a little bit anxious,” founder and executive chairman Dilip Shanghvi told reporters at a press meet after the announcement, recalling the company's last landmark acquisition of Ranbaxy Laboratories in 2014 which made it a global leader in generic drugs.

With Organon, however, Sun is not chasing sheer scale, but rather taking several steps up the ladder - to global commercialization access and a pipeline of innovative drugs and biosimilars. The deal advances Sun's push into the high-margin specialty/innovative branded market in the US, a longstanding goal of the company.

“The key difference in my mind is the difference in our growth trajectory. Sun has been consistently growing and Organon has not been growing. So, we know that for us to create value, a key driver is to find a way to grow this business much better than what it has been able to do,” said Shanghvi.

In an exchange filing early on Monday, Sun Pharma said it will acquire all outstanding shares of Organon at $14 each in an all‑cash transaction. The deal will be funded through cash resources of $2-2.5 billion and committed bank financing of $9.25-9.75 billion. Sun Pharma will also inherit Organon’s debt worth $8.6 billion.

This is the largest overseas deal by an Indian company after Tata Steel’s Corus acquisition for $12 billion in 2007.

With the acquisition, Sun Pharmaceuticals enters biosimilars as one of the top 10 companies in the segment. It also becomes one of top 25 global pharmaceutical companies with a combined revenue of $12.4 billion (double its $6.2 billion revenue in FY25) and increases its share of revenue from innovative medicines to 27%.

Organon was spun off from Merck in 2021, housing its women’s health, legacy general medicine brands, and biosimilars businesses.

Sun Pharma’s interest in Organon was first reported in January by The Economic Times, which later reported that the drugmaker had submitted a binding offer to buy the company on 24 April. Sun Pharma reportedly beat a rival consortium of Swedish private equity EQT and German drugmaker Grünenthal for Organon.

Sun Pharma shares surged as much as 9% on Monday, before settling 6.83% higher at ₹1,731.00 on the NSE. The Organon’s stock has gained over 86% on the NYSE in the last month following reports of its acquisition, bringing its market capitalization to $2.93 billion. However, its stock is down 11.5% over the past year.

What does Sun get?

While Sun Pharma’s track record of extracting value from acquisitions sparks confidence among some industry watchers, Organon’s huge debt remains a concern.

In FY25, Organon reported a revenue of $6.2 billion, down 3% from the year before, with an adjusted Ebitda of $1.91 billion, representing a 30.7% adjusted Ebitda margin. The company expects to deliver approximately $6.2 billion of revenue and approximately $1.9 billion of adjusted Ebitda for the full year 2026, it said in its full year results report in February.

However, the deal would boost Sun’s US sales of both generic and specialty medicines, as well as give it a larger push in the biosimilars market. The drugmaker is the fifth largest generics player in the US. Organon reported over $1.6 billion in sales from North America in FY25 and could increase Sun’s US earnings to over $3 billion.

“If you look at the track record of Organon also from 2021 to 2025, this business is growing at 13% CAGR…but what is more important is the future opportunities,” said managing director Kirti Ganorkar, pointing to the asset’s global commercial presence, women’s health and biosimilars pipeline.

“There are $320 billion worth of biologics losing patents by 2035. If you convert this to the biosimilars market, that can be a market opportunity worth $70 billion,” said Ganorkar. Organon has eight products currently and the deal gives Sun the opportunity to enlist or license more products, and make them available globally.

The acquisition also gives Sun access to several sizable markets for commercialisation. The company outlined 18 markets, including US, India, China, Canada, Brazil, and Korea, which collectively have sales of over $100 million.

Sun Pharma’s specialty, or innovative drug sales in the US have already overtaken its generic sales, with top leader Shanghvi emphasising the need to move up the value chain.

Sun’s track record

Sun Pharma has built much of its scale steadily over the last few decades through acquisitions, evolving from small domestic buyouts in the 1990s into increasingly global deals.

Its early international push began with the acquisition of Caraco Pharmaceuticals in 1997, followed by a series of smaller purchases across manufacturing and generics. The strategy shifted materially in the 2010s, starting with a controlling stake in Taro Pharmaceuticals in 2010 to effectively double its US business. The firm went on to acquire Ranbaxy Laboratories in a landmark $4 billion deal in 2014, making it the world’s fifth largest specialty generic pharmaceutical company.

Since then, Sun Pharma has focused on targeted acquisitions to deepen specialty and geographic capabilities, buying firms like Concert Pharmaceuticals and Checkpoint Therapeutics, and fully acquiring Taro in 2024, as it moved from a focus on scale to innovation.

Analysts tracking the company see the deal as largely favourable. “The deal is projected to be 30-40% EPS accretive by FY28E as per our calculation, with Sun’s management indicating that net debt/Ebitda would remain manageable at 2.3x,” Nuvama analyst Shrikant Akolkar said in a note.

“At 1.9x EV/Sales and 6.2x EV/Ebitda, the deal multiples are expected to turn even cheaper with new growth initiatives and future synergy benefits,” Akolkar noted.