Presented by-

Hashman Kaur A049

Ritika Agarwal A003
Manvir Singh A057
Zeeshan Patel A029
Hansika Ganeriwala A018
 ACQUISITION OF
RANBAXY BY DAIICHI
SANKYO
Daiichi Sankyo before Acquisition (Year
ending March 2008)
• 2nd largest Japanese pharmaceutical company with
head office at Tokyo, Japan
• On Sept 2005, Daiichi Pharmaceutical Co and Sankyo
Company formed a joint holding company, Daiichi
Sankyo by way of share transfer. In April 2007, Daiichi
and Sankyo merged into Daiichi Sankyo.
• Mainly a brand, R&D oriented company with
revenues of 880 bn Yen (FY 2007-2008)
• As of June 26, 2008 Daiichi Sankyo had a market
capitalization of Yen 213,88,830 lakh
• The shares were widely held by institutional and
individual shareholders
• Portfolio - Cardiovascular, Oncology, Metabolic
disorders, Anti-infectives
• Business operations in 21 countries aiming to be
Global Pharma Innovator by 2015
Ranbaxy before Acquisition (Year Ending
December 2007)
• RLL, a public limited company with its registered
office in Mohali ,Punjab, India owned by Mr.
Malvinder Mohan Singh and Mr. Shivinder Mohan
Singh
• India’s largest pharmaceutical company, ranked
amongst the top ten generic companies globally
• As of FY 2007, revenues of 69,822 million INR
($1.5billion) was reported (Emerging 54%, Developed
40%, others 6%)
• Strong product , patent and API portfolio
• Served customers in over 125 countries with USA
being largest market and had an expanding
international portfolio of affiliates, joint ventures and
alliances, manufacturing facilities in 11 countries &
operations in 56 countries.
RANBAXY’S
MAJOR
MILESTONES
THE DEAL
 On June 11, 2008 Daiichi Sankyo and Ranbaxy entered into
a binding share purchase and share subscription
THE agreement.
Daiichi Sankyo agreed to buy more than 50.1 percent stake
TAKEOVER in Ranbaxy Laboratories.

OF RANBAXY Daiichi Sankyo acquired the majority equity stake in

Ranbaxy by a combination of:
• purchase of shares held by the promoters;
• preferential allotment of equity shares;
• an open offer to the public shareholders for 20
percent of Ranbaxy’s shares, as per Indian
regulations; and
THE TAKEOVER OF RANBAXY
 THE TAKEOVER OF RANBAXY
• Offered purchase price Rs. 737 per share
• Transaction valued at US $4.6 billion valuing
Ranbaxy at $8.5 billion
• Daiichi Sankyo acquired 34.8% stake of
promoters
• It made an open offer to Ranbaxy shareholders
for another 20%
• It picked up another 9.12% through preferential
allotment.
• Daiichi ended up acquiring 63.92% shares of
Ranbaxy by Nov 2008.
• Including transaction costs, the deal costs
Daiichi $4.98 billion and recorded goodwill of
$4.17billion.
• If Daiichi Sankyo fails to meet with adequate
shareholder response during the open offer, it has
the option to exercise a preferential issue of
warrants that can increase stake in Ranbaxy by
another 4.9%.
• It was an all-cash transaction.
• Funded through a mix of bank debt facilities and
existing cash reserves of Daiichi Sankyo.
• The debt was of value US$ 2.6 billion which is
almost 50% of total funding required for the deal.
THE DEAL
FINANCIAL • The Nomura Securities Co Ltd, the Japan headquartered
AND LEGAL investment bank, acted as the exclusive financial advisor.

ADVISORS • Jones Day as the legal advisor outside India.

• Mehta Partners LLC as the strategic business advisors

• Ernst & Young as the accounting and tax advisor.

• The Religare Capital Markets Limited acted as exclusive

financial advisor to Ranbaxy and the Singh family.

• Vaish associates were their legal advisors

 MESSAGE FROM CEO
Mr. Malvinder Mohan Singh, CEO and Managing "The proposed transaction is in line with our
Director of Ranbaxy Laboratories Limited, said “I am goal to be a Global Pharma Innovator and
delighted to announce our association with Daiichi provides the opportunity to complement our
Sankyo. Together with our pool of scientific, technical strong presence in innovation with a new, strong
and managerial resources & talent, we would enter a
presence in the fast-growing business of non-
new orbit to chart a higher trajectory of sustainable
growth in the medium and long term in the developed
proprietary pharmaceuticals" said Takashi
and emerging markets organically and inorganically. Shoda, President & CEO of Daiichi Sankyo
Company, Limited.
This is a significant milestone in our Mission of
becoming a Research based International
Pharmaceutical Company. ”
 STRATEGIC OBJECTIVES
BEHIND THE DEAL
Daiichi Sankyo and Ranbaxy believed that this transaction would create significant
long-term value for all stakeholders.

• A complementary business combination that provides sustainable growth by

diversification and establishing a strong presence in all pharmaceutical
therapeutic areas
• An expanded global reach that enables leading market positions in both mature
and emerging markets with acquirer's strength in proprietary medicine
complemented by seller’s leadership in the generics segment
• Strong growth potential by effectively managing opportunities across the full
pharmaceutical life-cycle; and
• Cost competitiveness by optimizing usage of R&D and manufacturing facilities of
both companies, especially in India.
 SYNERGIES AIMED AT THROUGH
THE DEAL
• Considering that Ranbaxy is a generic company and Daiichi Sankyo an
innovator company, both businesses complement each other with
negligible overlap.

• Ranbaxy provides a low-cost manufacturing set up to Daiichi Sankyo.

• Ranbaxy has a small presence in the Japanese market where the generics
market holds good opportunities.

• Also Ranbaxy incurred lower costs, as it became debt free company.

 SYNERGIES AIMED AT THROUGH
THE DEAL
• Ranbaxy geographically diversified presence across the globe will enable it to provide a
wider reach to Daiichi Sankyo’s portfolio, including India.

• The deal made the amalgamated company to be the world’s 15th largest pharmaceutical
company in the world by market capitalization.

• Ranbaxy through the merger, bypassed a lot of European and U.S companies that were
unable to enter the Japanese markets due to its stringent safety and testing requirements

• Daiichi got access to Ranbaxy’s basket of 30 drugs for which the company had approvals in
the US, including 10 drugs for which Ranbaxy had exclusive sales right to sell for six months
after the expiry of their patents. The deal gave Daiichi an access to best FTF 180 day
exclusivity pipelines in the industry.
 MARKET REACTIONS TO THE
ACQUISITION ANNOUNCEMENT
The purchase price represented a premium of 53.5 percent to Ranbaxy’s average daily
closing price on the National Stock Exchange for the three months ending on June 10,
2008 and 31.4 percent to such closing price on June 10, 2008.

This is an indicator that the Daiichi had seen potential in Ranbaxy’s business in India as
well as in other countries.
 MARKET REACTIONS TO THE
ACQUISITION ANNOUNCEMENT

The share price of Ranbaxy rose 3.86 percent to Rs. 526.40 (BSE) and Rs.
525.85 (NSE) on June 9, two days before the company announced its
buyout by Daiichi Sankyo. India’s benchmark index, Sensex, plunged 506
points the same day.
 MARKET REACTIONS TO THE
ACQUISITION ANNOUNCEMENT
Daiichi Sankyo agreed to pay as much as $4.6
billion for a 50.1 percent stake in Ranbaxy. As
reported earlier by Financial Express, on June 10,
a day before the deal was announced, the
Ranbaxy scrip surged 6.52 percent to Rs. 560.75
and the Sensex fell 177 points. The stock ended
almost flat at Rs. 560.80 on June 11. On Monday,
it settled at 567.75 points, up a mere 0.15
percent.
 Daiichi Sankyo paid INR 737, that is about 100%
premium over intrinsic value of Ranbaxy’s share

• DCF Valuation = 254.6

OVERVIEW OF FTF Value = 106
Investment in Associates = 5.03
RANBAXY Total = 365.63
• Through DCF valuation, a value of INR 254.6 was
LABORATORIES realised; however this value does not incorporate the
value of the strong FTF pipeline that Ranbaxy had.
VALUATION • This FTF pipeline is valued at around INR106/share.
• The value for investment in associates also was added.
• The effective price as per our calculation for Ranbaxy
in June 2008 came out to be INR 365.63.
• The higher valuation was due to Ranbaxy’s strong
infrastructure, presence across geographies and a
robust product pipeline
 POST-MERGER SYNERGY ANALYSIS

• On April 17, 2013, Sankyo and Ranbaxy

launch hybrid business in Brazil to expand
business of both companies.
• As part of this synergy, Ranbaxy will
support Daiichi Sankyo’s Brazilian
subsidiary to enter the branded generics
market, in addition to its established
business of providing innovative products.
Ranbaxy’s Brazilian subsidiary would
continue to independently promote
Ranbaxy’s generic products and also enter
into branded generics in Brazil.
 POST-MERGER SYNERGY ANALYSIS
However, the whole picture was not that bright.

RLL former chairman has rubbished Daiichi Sankyo's claim that crucial facts about the US authorities’ probe were
concealed at the time the company was sold by his family and attacked the Japanese firm for mismanaging the
Indian drug maker.
Singh also denied and rejected the charges put by the former company executive, Dinesh Thakur.

Ranbaxy agreed to pay a fine of $500 million for selling adulterated drugs in the US market and pleaded guilty to
seven criminal counts, including fudging of drug data, intention to defraud, and failing to report that its drugs did
not meet specifications.

The $500-million fine is the largest financial penalty paid by any generic drug maker in the US for violating
provisions of the federal Food, Drug and Cosmetic Act (FDCA).

Ranbaxy’s management described Daiichi Sankyo's allegation as 'baseless’ about 'certain Ranbaxy shareholders'
misrepresenting critical information concerning the investigations conducted by the US authorities.
WHAT MIGHT HAVE GONE
WRONG?
Improper Due-Diligence
• Losses were mainly rooted in poor performance owing to FDA
ban that already started in 2006
• In September,2008 FDA sent Ranbaxy warning letters -cGMP
violations at two plants : Paonta Sahib and Dewas
• Forced restrictions on the import of drugs manufactured at
these plants and banned the entry of almost 30 Ranbaxy
products in the USA.
• Ranbaxy’s QC scientists took shortcuts on the stability tests.
• Submitted manipulated data as a part of its application to
market new generic drugs in the US and kept hundreds of
improperly stored samples in its factories.
• Daiichi should have tried to estimate the full extent of the
legal risk arising out of the US FDA letters.
• They should have asked for information on plant inspections
done in 2006 and details of submissions made by Ranbaxy in
defence.
 WHAT MIGHT HAVE GONE WRONG?
• Organizational structure of Ranbaxy- Integration of Analytical research and quality
assurance (QA) departments encouraging the problems to stay confined within the
walls of the company.
• Daiichi should have assessed the standard pharmaceutical organizational structure.
• Poor human resource practices of Ranbaxy, which led to high employee turnover.
• In R&D alone, 4 departmental heads had resigned in quick succession in the period
just before acquisition. This phenomenon of resource attrition at Ranbaxy continued
even after the acquisition.
• Mr Malvinder Singh the CEO and promoter of the company left the company in May
2009.
• In the original agreement he was to stay with Ranbaxy for 5 years after the
acquisition. By leaving 4 years before the contractual date not only did he have to
pay a hefty severance package but also raised doubt among foreign companies,
looking for Indian partners.
• For a foreign company like Daiichi it was natural to rely on promoters and their team
to continue running the company for a while.
 WHAT MIGHT HAVE GONE WRONG?

• Daiichi paid INR 737 for a company with an intrinsic value of just INR 365. This
valuation glitch clearly demonstrates Daiichi’s lack of understanding of generic
business.
• Inadequate due diligence was done considering the size, scale and scope of the deal,
reflecting Daiichi’s inability in understanding of India and the generic world.
• One more thing that Daiichi probably missed on was the continuously increasing debt
levels of Ranbaxy.
• Synergies were not achieved in the patented drugs space, because even after the
acquisition R&D expenses for Daiichi had grown from 18.6% to 21.9% of sales. Should
the synergies have been achieved, with the directing of R&D and manufacturing to
India, COGS and R&D expenses for Daiichi should have decreased or at-least remained
stagnant.
 AFTERMATH OF DEAL
The EPS showed a double fold increase
without much of increase in gross profit
which indicated that the reserves & surplus
should have been made available
accordingly.
The balance sheet of Daiichi Sankyo
indicated that the current liabilities had
increased to 161% when compared to
current assets which had decreased by
(15.43%).

In the immediate year after the acquisition Ranbaxy reported a loss of INR 9,512.05 million
and Daiichi in spite of diversifying its geographic footprint booked a loss of ¥215,499
million and they also made a onetime goodwill write-down of ¥351.3 billion for
investment in Ranbaxy. These losses were mainly rooted in Ranbaxy’s poor performance
owing to the FDA ban.
 AFTERMATH OF DEAL

• COGS significantly decreased in the year 2008 due to the increase in purchase of
Investments owing to the acquisition.

• Three weeks after the deal, Daiichi Sankyo reported currency – exchange losses of Rs. 9
billion in 2008 owing to the goodwill evaluation at the time acquisition

• On February 25, the U.S. Food and Drug Administration announced that a facility owned
by India-based Ranbaxy Laboratories falsified data and test results in approved and
pending drug applications.
• The agency halted review of drug applications from plant due to evidence of falsified
data; invokes application integrity policy.
 AFTERMATH OF DEAL
• Daiichi, in its eagerness to tap the expertise of a generic drug maker, took the risk of buying
Ranbaxy for a top dollar. Daiichi Sankyo though learnt about the US FDA invocation ignored it
expecting it to get resolved.

• Ranbaxy shares have staged a huge rally since hitting a low 133 rupees in March 2009, trading at
465 rupees on March 14, 2011.

• Daiichi lack of understanding of generic business in the valuation paid for acquiring Ranbaxy.

The deal is a classic example of an acquirer paying top price without

looking too closely at the quality of the goods.
 SUN PHARMA
ABOUT THE COMPANY
• Established in 1983, listed since 1994 and headquartered in India, Sun
Pharma is an international, integrated, specialty pharmaceutical
company.
• Sun Pharmaceuticals Ltd. is India's largest (by market capitalization)
and the world’s
• 5th largest specialty generic pharmaceutical company.
• The company manufactures and sells high-quality, affordable
medicines in over 150 countries across 6 continents.
 SUN PHARMA
ABOUT THE COMPANY
• In India, the company is a leader in niche therapy areas of psychiatry,
neurology, cardiology, diabetology, gastroenterology, orthopaedics
and ophthalmology.
Sales
Turnover

28%

72% 60% US

Overseas Mkt Domestic

 SUN PHARMA
ABOUT THE COMPANY
• The company has strong skills in product development, process
chemistry, and manufacturing of complex dosage forms and APIs
• Sun Pharma's business is broadly categorized into four segments:
• Active Pharmaceutical Ingredients (API)
• International Branded Generics
• Indian Branded Generics
• US Generics
• They also make specialty APIs that include steroids, hormones,
peptides and anti-cancers manufactured at 14 international standard
manufacturing facilities around the world.
SUN PHARMA AT A GLANCE
 SUN PHARMA
FINANCIAL ADVISORS LEGAL ADVISORS
 RANBAXY
FINANCIAL ADVISORS LEGAL ADVISORS
 THE ANNOUNCEMENT AND MARKET
REACTION
• Sun Pharma on 6th April, 2014 announced that it would acquire 100% of Ranbaxy
Laboratories Ltd.

• All-stock transaction, valued at $4 billion - which resulted in making Sun Pharma

• largest pharmaceutical company in India

• largest Indian Pharma company in the US

• 5th largest generic company worldwide.

 THE ANNOUNCEMENT AND MARKET
REACTION
• The transaction value implies a revenue multiple of 2.2 based on 12 months ended
December 31, 2013.

• As an immediate effect, shares of Sun Pharma went up to 2.7% in the morning trade
after the acquisition announcement while that of Ranbaxy went down by 3.1%.

• The swap ratio of 8 shares of Sun Pharma for every 10 shares of Ranbaxy works to the
advantage of the new entrants into Ranbaxy Laboratories Ltd. as at the prevailing price
they now needs to pay 5% less for getting the shares of Sun Pharma as compared to
buying them directly from the market.
 STRATEGIC OBJECTIVES BEHIND THE DEAL
• 5th largest global specialty generic pharma company
• No. 1 pharma company in India, one of the fastest growing markets
• No. 1 Indian pharma company in US market
• Over US$ 2 billion in sales
• Pipeline of 184 ANDAs including high-value FTFs
• No. 1 in generic dermatology, No. 3 in branded

• Approaching US$ 1 billion sales in high-growth emerging markets

• Expanding presence in Western Europe
 SYNERGIES AIMED AT THROUGH THE DEAL
• Synergy in M&A is the approach of the business units that if they combine their business by
forming one single unit and then working together for the accomplishment of common objective
• Total earnings of the business can be more than the sum of earnings of both the businesses
earned individually and also the cost can be reduced by such merger.
 SYNERGIES AIMED AT THROUGH THE DEAL
1. Strengthened Global Footprint:

*ROW includes all Non-US and Non-India sales + API and others
SYNERGIES AIMED AT THROUGH THE DEAL
2. World’s 5th largest Specialty Generic Pharma Company
SYNERGIES AIMED AT THROUGH THE DEAL
3. India’s Largest Pharma Company
 SYNERGIES AIMED AT THROUGH THE DEAL
4. Leadership In Prescription Share Number 1 Position with 13 Class of Specialist Doctors

*Ranks based on prescription share

SYNERGIES AIMED AT THROUGH THE DEAL
5. Complementary Therapeutic Basket
 SYNERGIES AIMED AT THROUGH THE DEAL
6. India: Broad and Complementary Brand Presence

Combined entity: 31 brands in top 300

o Minimal Overlap
o Enhances Rural penetration

Clear leadership:
Chronic Therapies
+
Acute, Hospitals and OTC Business
SYNERGIES AIMED AT THROUGH THE DEAL
7. US: Growing Leadership Position

Strong pipeline of 184 ANDAs including high-value FTFs

o Clear Dermatology leadership
o No. 1 in generic dermatology, No. 3 in branded
o Coverage across Actinic keratosis, Anti-fungals, Acne, etc
 SYNERGIES AIMED AT THROUGH THE DEAL
8. Emerging Market: Bolsters Presence

Merged entity to have global footprint across 55 markets

o Increasing leadership in key Emerging Markets
o Russia, Romania, South Africa, Brazil & Malaysia
Extensive Product Basket – largely Branded business with minimal overlap
o Strong Doctor Relationships
o Opportunities to leverage market presence to cross-sell products
o Strong product pipeline for high-growth emerging markets
SYNERGIES AIMED AT THROUGH THE DEAL
9. Financially Compelling combinations
SYNERGIES AIMED AT THROUGH THE DEAL
10. Track Record of successful turnaround of 16 acquisitions
 SUN PHARMA RANBAXY
MERGER /ACQUISITION PROCESS:
The Sun Pharma Ranbaxy Merger /Acquisition Process can be majorly divided into two
stages:

• Pre-acquisition stage
1. Making Decision to Buy
2. Due diligence/ company evaluation
3. Process initiation/proposal phase
4. Structuring business deal
5. Financial settlement/exchange of stocks
• Post-acquisition stage
1. Merger closing phase and post merger integration plans to operate the
venture
THE
PRE-
ACQUISITION
STAGE
 • Ranbaxy Laboratories Limited is an Indian
multinational pharmaceutical company with a
sizeable drug pipeline, a very promising future
and has announced some big product launches in
future in the US generics market.

1. Making • Daiichi (a Japanese company), the promoters of

Ranbaxy was struggling to manage its plants
Decision to when came under the US Food and Drug
Administration’s 12 scanner after the acquisition.
Buy: Ranbaxy was unable to overcome these issues
and increased pressure on its promoters.

• Dilip Shanghvi, Managing Director, Sun Pharma

has a reputation for turning around companies in
trouble by acquiring them at a good price.
  Sun Pharma and Ranbaxy deal has many promising
benefits as listed below.

• Creates the 5th largest specialty generics

1. Making company in the world and the largest
pharmaceutical company in India.
Decision to Buy
• Gets leadership position in 13 specialty
cont. segments, Operations in 65 countries, 47
manufacturing facilities across 5 continents.

• Ranbaxy’s branded derma business in the US

adds to Sun's already strong derma franchise
 2. Due Diligence/
Company Evaluation
 This process has revealed details about Ranbaxy and the merger as
mentioned below:
• Sun Pharma’s revenue will jump by a healthy 40% but its operating
profit will rise by a just 7.5%, based on pro forma 2013 financials.

• Ranbaxy’s profits have been hit by provisions related to foreign

exchange and inventory write-offs. Sun Pharma has said it expects
to get Rs.1,550 crore in merger related synergies by the third year
after the acquisition is completed. That is significant, and these
savings should be from procurement, sales growth and supply chain
efficiencies.

• The merger will have a negative effect on Sun Pharma’s

performance in the short term reducing its operating profit margin
from 44.1% to 29.2%.

• In terms of size, Sun Pharma will have a pro forma 2013 revenue of
Rs.25,911 crore and an operating profit of Rs.7,577 crore, with a net
profit of Rs.1,710 crore.
 • In process initiation, acquiring company sends
a proposal for a merger or an acquisition to the
target company with complete details of the
deal including the commitments, amount and
the strategies.

3. Process • It is a non-binding offer document which is not

available in open public forum.
Initiation/
Proposal Phase • Sun Pharma has hired McKinsey & Company to
facilitate the merger of the two leading
pharmaceuticals in the domestic market.

• McKinsey had been given a clear mandate,

including "integration, rationalization and
capacity utilization".
 4. Structuring
Business Deal
 This stage emphasize on giving a proper structure to the business
deal. The road map includes:-

• Regulatory approvals from various bodies such as SEBI, CCI,

Stock Exchanges, High Courts of Gujarat, Haryana and
Punjab, and the stakeholders of both companies

• Streamlining of teams

• Resolving regulatory issues at Ranbaxy plants under US

import alert.

• Restructuring of product portfolios to align with the

interests of Sun Pharma

• Benchmark the staff-productivity ratio

5. Financial Settlement/
Exchange of Stocks
• Ranbaxy shareholders will receive 0.8
shares of Sun Pharma for each share of
Ranbaxy.

• The exchange ratio represents an implied

value of Rs 457 per Ranbaxy share and the
transaction has a total equity value of
approximately $3.2bn.

• After the deal, Daiichi will hold a stake of

about 9% in Sun Pharma. Hence, the deal is
cashless.
THE
POST-
ACQUISITION
STAGE
 Merger Closing Phase and Post-Merger Integration
Plans to Operate the Venture
• It defines the parameters of the future relationship between the two. After
signing the agreement and entering into the venture, Sun Pharma has various
plans as listed below:
• It has a detailed turnaround plan for its new purchase.

• The company’s basic structure and functions could be managed in the first year. There is a
plan to streamline and rationalize functions. While it will take at least two to three years to
turn-around the merged entity and to ensure contributions from the buyout.

• It has prepared a three-pronged strategy which includes:

1. Resolution of regulatory issues
2. Integration of supply chain and field force for enhanced efficiency and productivity
3. Higher growth through synergy in domestic and emerging markets.

• It is targeting to engineer the full turnaround of Ranbaxy in three-year to four-year period

after the closure of the transaction.
 Regulatory issue
• Typically, CCI takes decisions related to mergers and acquisitions (M&As) within 30 days, though it can
do so within 210 days of the filing of application in this regard. After that a proposed deal is deemed to
have been approved. The proposed merger also requires approvals from stock exchanges, Sebi, the
high courts of Gujarat, Punjab and Haryana, creditors and shareholders of both companies.
• In the last week of August, India’s antitrust regulator has ordered a second-stage investigation into the
merger of Sun Pharmaceutical Industries Ltd and Ranbaxy Laboratories Ltd, citing the risk that the deal
could harm “national interest” by resulting in significant market domination by the combined entity
• This is the first time the Competition Commission of India (CCI) has decided on a second-stage inquiry,
which follows a preliminary investigation of a deal, and raised such an objection. This was prompted
due to the possibility of ripple effect of the merger on prices of life-saving, essential medicines in the
Indian market.
• The merger will create India’s biggest drug maker with an 8.5% share of the 16 pharmaceutical market,
worth an annual Rs.76,000 crore by sales. Under India’s merger and acquisition (M&A) rules,
companies need CCI’s approval if the combined assets of the two entities are worth more than
Rs.1,500 crore or their combined revenue amounts to more than Rs.4,500 crore in India. The CCI
approval is also mandatory if the companies have assets outside India, or their combined assets are
worth more than $750 million (Rs 4,566 crore), or if their turnover is more than $2,250 million (Rs
13,700 crore)
 Decision of competition commission of India

• The merger will create India’s biggest drug maker with an 8.5% share of the 16 pharmaceutical market,
worth an annual Rs.76,000 crore by sales. Under India’s merger and acquisition (M&A) rules,
companies need CCI’s approval if the combined assets of the two entities are worth more than
Rs.1,500 crore or their combined revenue amounts to more than Rs.4,500 crore in India. The CCI
approval is also mandatory if the companies have assets outside India, or their combined assets are
worth more than $750 million (Rs 4,566 crore), or if their turnover is more than $2,250 million (Rs
13,700 crore)

• The antitrust body’s main concerns are about the 46 drug formulations that will constitute the merged
entity’s portfolio and in which it will have a significant presence in the market. Out of these 46 drug
segments, the prices of five are regulated by the government. “In the rest of the segments, market
domination is a genuine worry,” said a government official familiar with the development

• CCI had directed Sun Pharma to divest all products containing 'Tamsulosin + Tolterodine' which are
marketed and supplied under the Tamlet brand name. Similarly, Ranbaxy was directed to divest all
products containing Leuprorelin which are marketed and supplied under the Eligard brand name. It
also had to divest products such as Terlibax, Rosuvas EZ, Olanex F, Raciper L and Triolvance.
 Conclusion
• Mr. Dilip Sanghvi is known for turnaround of acquired company among his peers.

• He is most open to using mergers and acquisitions (M&A) to grow faster, but he has always been
conscious of Sun Pharma’s bite size and the price of the acquired asset.

• The financial conservatism is visible in the Ranbaxy acquisition as well. The all-stock deal will
double Sun Pharma’s revenues at a cost of eight per cent dilution in equity and earning per share.

• The deal has reaped the benefit in the market price also as Sun pharma market price after the
date of announcement of merger with Ranbaxy till the record the date of merger has touch a new
high to INR 1200 per share i.e. gains of almost 100%.
 Conclusion
• But fall from the highest peak and also after announcement of hit on profit for F Y 2015-
16 has eroded the gains which was seen as being due to the merger for the shareholders
of Sun pharma.

• Now the market price is trading at the normal return of sun pharma which has given in
the last two previous years. So as on date the Ranbaxy shareholders have benefited due
to the merger transaction.

• But all the stakeholders will gain in the long term as it was proved in all earlier
acquisition, when the synergies benefit start reaping to the Sun Pharma due to its
turnaround strategy.
 ACQUISITION OF
UNICHEM BY
TORRENT PHARMA
 NOT JUST HEALTHCARE...LIFE CARE
• One of the leading Pharma companies in the Country.
• The flagship Company of Torrent Group with a turnover of Rs. 7673 Cr
• Pioneers in initiating the concept of niche marketing in India and ranked
amongst the leaders in therapeutic segment of cardiovascular (CV), central
nervous system (CNS), gastro-intestinal (GI) and women healthcare
(WHC) with significant presence in diabetology, pain management,
gynaecology, oncology and anti-infective segments.
• With presence in more than 40 countries like US, UK, Germany, Europe,
Brazil and rest of the world, Torrent is all poised to spread wings across
globe with strong technical capabilities and international accreditations.
 HISTORY OF MERGERS AND
ACQUISITIONS IN TORRENT PHARMA
• 2005 started international acquisitions with 90-year-old Heumann
from Pfizer to enter the German market
• 2013 Acquisition of Elder Pharma's Indian branded business
• 2015 Dermaceutical business of Zyg Pharma
• 2015 purchased ANDA of Monocycline from Ranbaxy for the US
Market
• 2016 API plant of Glochem Industries
• 2017 women healthcare brands from Novartis and Unichem's
Indian branded business along with its Sikkim Plant
• 2018 acquired Bio-Pharm, Inc. (BPI) a generic pharmaceuticals
and OTC Company in USA which also included a US FDA registered
manufacturing facility.
IMPROVING HEALTH THROUGH SUPERIOR PRODUCTS
• One of India’s most respected pharmaceutical companies committed to
delivering better health through superior products.
• Unichem has several pharma products in therapeutic areas like
gastroenterology, cardiology, diabetology, psychiatry, neurology, anti-
bacterials, anti-infectives and pain management.
• Backed by a team of over 2500 people, Unichem is headquartered in Mumbai,
India, and has six drug manufacturing locations across the country.
• With formulations constituting the core of the company’s business, Unichem
is backward integrated to API Manufacturing. By combining strategic
research and in-depth industry knowledge, Unichem aims to transform itself
into a global pharmaceutical drug Company with an increasing focus on
cutting-edge research and developed markets.
 PRE-ACQUISITION SCENARIO

• Torrent faced a slowdown in its US business

hence, turning its focus on growing its domestic
• Unichem had not been able to leverage its slow-
business. The company hoped to clock 25 per
growing, mature brands portfolio and they
cent compound annual growth rate (CAGR) for
believed that Torrent would be able to turn that
its India business over the next three years to
around, as it has done with Elder
beat the slowdown in other geographies.
Pharmaceuticals Ltd.
• The acquisition would open doors for Torrent to
• The deal would also enable Unichem to deliver
enter into the OTC segment with ‘Unienzyme’
superior results in areas of innovative research,
helping it become a dominant player in the
new chemical and biological entities and move
digestive enzyme market.
into next the orbit of growth along with using
• Besides, it will also be among the top three
the funds to invest in its international business.
players in anti-hypertensive, anti-depressants
and tranquilizers.
THE ACQUISITION
 THE ACQUISITION
• Paid 3600 Cr for acquisition of Unichem’s branded business;
domestic and Nepal business along with it’s Sikkim
manufacturing facility.

• Definitive binding agreement entered into between Torrent

and Unichem on November 3, 2017.

• Acquired in December 2017, from 18 per cent to more than

30 per cent in 2018-19 (FY19).

• The transaction was completed in an on going concern basis

by way of slump sale and the company funded the
acquisition through a mix of it’s own funds and bank
borrowings.
 BENEFITS OF THE ACQUISITION TO TORRENT
PHARMA
• The deal would add more than Rs 1,000 crore annually to Torrent’s
turnover.

• Also, post-acquisition, Torrent will enter the list of top five pharma
firms in the country and will be ranked at number five.

• Strengthen its position in the key segments of cardiology, diabetology,

gastro-intestinal and CNS (central nervous system) therapies. It is also
expected to realize cost and revenue synergies in Torrent’s branded
business in India.

• The acquisition will help Torrent increase its Indian pharma market
share in terms of sales to 3.4% from 2.4%.
 BENEFITS OF THE ACQUISITION TO TORRENT
PHARMA
• As many as 3,000 employees will be added to Torrent’s existing
employee workforce after the Unichem acquisition along with 2000
stockists enhancing their distribution reach.

• The deal included the purchase of the brand Unienzyme, allowing

Torrent to enter the OTC drugs market, as well as brands including
Losar, Ampoxin and Telsar.

• The acquisition would add a brand of Rs 200 crore and three brands
of over Rs 50 crore to Torrent’s existing portfolio.
 BENEFITS OF THE ACQUISITION TO
UNICHEM
• Remain an independent publicly listed company with no change in
its existing shareholding following the transaction.

• The deal enables Unichem to focus more on its international

business, including finished formulations, active pharmaceutical
ingredients, contract manufacturing and contract research.

• Proceeds from the deal would allow it to increase its investments in

research and development of new chemicals, biological entities,
biosimilars and complex generics.
 POST-ACQUISITION SCENARIO
• Torrent pointed out in its post-earnings media address that the
attrition rate at Unichem had halved in the past month or so.
• Sales, marketing, and promotional spend as a percentage of
domestic sales declined by 261 basis points in FY19, which
indicates the front-end synergy of the Unichem acquisition by
Torrent.
• Medical representative (MR) productivity improved to Rs 75 lakh
per year from Rs 40 lakh a year in FY18 when it had plummeted
primarily due to the acquisition of Unichem’s domestic and Nepal
businesses.
• The deal catapulted Torrent Pharma to the fifth rank in the domestic
market.
• The deal also gave Torrent access to 120 brands of Unichem in
India and Nepal besides a manufacturing unit in Sikkim.
THANK
YOU