Sun Pharma Bid to Buy Ranbaxy Gets India Antitrust Approval

India’s antitrust regulator cleared Sun Pharmaceutical Industries Ltd.’s $5.3 billion proposal to buy Ranbaxy Laboratories Ltd. contingent on the companies selling some overlapping brands.

The Competition Commission of India ordered Sun and Ranbaxy to sell seven brands in which the merged company would have “appreciable adverse effect” on domestic competition as a result of market share, the commission said on its website yesterday.

The sale of the brands will help address the regulator’s concerns that the combined entity would have too much power in dictating drug prices in India. After the acquisition, Sun will be the fifth-largest generic drug company in the world and will have the largest share of the Indian pharmaceutical market, the company said in April.

Sun Pharma shares gained as much as 3.2 percent to 854.45 rupees in Mumbai trading today before trading at 841.95 rupees at 10:19 a.m. in Mumbai trading today. Ranbaxy climbed 2.8 percent.

Ranbaxy and Sun combined would control 90 to 95 percent of the market for urology medications tamsulosin and tolterodine, “resulting in a near monopoly in the market,” the New Delhi-based commission said.

Mumbai-based Sun was told to sell its brands of tamsulosin and tolterodine, called Tamlet, and Lupride, while Ranbaxy has to dispose of its brands Terlibax, Rosuvas EZ, Olanex F, Raciper L and Triolvance within six months. Instead of Sun’s Lupride, the sale of the Ranbaxy version of the product, Eligard, is also an option the companies can consider.

Sun had 5.4 percent of the Indian pharmaceutical market in the 12 months ended October, according to data from AIOCD Pharmasofttech AWACS Pvt., a Mumbai-based market research company. Ranbaxy had 3.6 percent of the market.

Daiichi Sankyo

In the 12 months to October, sales of the seven products the competition commission told the companies to sell totaled 1.37 billion rupees ($22 million), according to AIOCD.

Japan’s Daiichi Sankyo Co. on April 7 said it agreed to sell its controlling stake in Ranbaxy to Sun, after taking writedowns on the Indian drugmaker and seeing its own share price slide as it failed to raise manufacturing conditions at the unit to levels that would pass muster with U.S. regulators.

The U.S. Food and Drug Administration has banned four of Ranbaxy’s plants from manufacturing for the U.S. due to quality concerns. Daiichi had aimed to have approvals for the deal from Indian courts and regulatory agencies and complete the deal by the end of December.

The all-share deal was valued at about 244.7 billion rupees when it was announced and is now valued at about 329.1 billion rupees, according to Bloomberg data.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE