Sun Pharma, Ranbaxy Move Closer to Finalizing Merger
By

Sun Pharmaceutical Industries Ltd  has moved closer to finalizing its acquisition of Ranbaxy Laboratories. The company have received approval from the Competition Commission of India, subject to certain product divestments and other terms. DCAT Value Chain Insights (VCI) examines the deal and the position of a combined company in the global pharmaceutical market. 

With approval from the Competition Commission of India (CCI) of India, Sun Pharmaceutical Industries has moved closer to its proposed acquisition of Ranbaxy Laboratories, a deal that was announced earlier this year. The proposed acquisition would create the fifth largest specialty generics company globally and the largest pharmaceutical company in India. An important consideration for a combined company would be the management of the company’s manufacturing and supply network. DCAT Value Chain Insights (VCI) examines the position of a combined Sun Pharma and Ranbaxy on a product and manufacturing basis.

Looking at the deal and a combined company
Subject to certain conditions, India’s CCI has approved the proposed merger of Sun Pharma and Ranbaxy. Sun Pharma and Ranbaxy had filed the notice with the CCI in May 2014 and sought its approval with respect to the proposed $3.2 billion acquisition of Ranbaxy by Sun Pharma from Daiichi Sankyo. Daiichi Sankyo holds a controlling stake in Ranbaxy, which it acquired in 2008/2009, and earlier this year, Daiichi agreed to sell its stake to Sun for $3.2 billion. Upon closing of the deal, Ranbaxy will be merged with Sun Pharma by means of a share swap, resulting in Sun Pharma as the surviving company and Ranbaxy as the company to be absorbed. At present, Daiichi Sankyo owns approximately 63.41% (ratio of voting rights held) of the shares of Ranbaxy. Daiichi Sankyo is scheduled to acquire approximately 9% of the shares of Sun Pharma as a result of the merger. One of the preconditions of the CCI order is that proposed combined entity of Sun Pharma and Ranbaxy divest seven products. These products constitute less than 1% of the combined entity’s revenues in India.

If the deal proceeds as planned, the combined entity of Sun Pharma and Ranbaxy will have operations in 65 countries, 47 manufacturing facilities, and a portfolio of specialty and generic products marketed globally, including 629 abbreviated new drug applications. On a pro forma basis, the combined entity’s 2013 revenues are estimated at $4.2 billion. Approximately 47% of sales will be from the US, 22% from India, and approximately 31% from the rest of the world.

One of the issues going forward for the combined company will be manufacturing quality, with both companies recently facing issues in this area. In November 2014, the US Food and Drug Administration (FDA) rescinded Ranbaxy’s previously granted tentative approvals for the company’s abbreviated new drug applications (ANDAs) for esomeprazole magnesium delayed-release capsules, 20 mg and 40 mg, and for valganciclovir hydrochloride tablets USP, 450 mg. Esomeprazole magnesium is the generic version of AstraZeneca’s gastrointestinal drug, Nexium, and valganciclovir hydrochloride is the generic version of Roche’s antiviral drug, Valcyte. In a statement, Ranbaxy said that the FDA said its original decisions granting tentative approvals were in error because of the compliance status of the facilities referenced in the ANDAs at the time the tentative approvals were granted. As a consequence, in FDA’s view, Ranbaxy forfeited its eligibility for 180-day exclusivity for its ANDA for valganciclovir hydrochloride tablets USP, 450 mg. Ranbaxy has had quality control issues at its manufacturing facilities, which included an FDA import alert issued earlier this year for active pharmaceutical ingredients manufactured (APIs) at Ranbaxy’s facility in Toansa, India.

In May 2014, the FDA issued a Warning Letter to Sun Pharmaceutical Industries for data-integrity issues and related cGMP violations at the company’s API and finished product manufacturing operations at the company’s facility in Vadodara, Gujarat, India. FDA issued the letter in response to an inspection of the pharmaceutical manufacturing facility made on November 13 to November 16, 2013. Also, earlier this year, Sun Pharmaceutical Industries Ltd announced that, as a part of its manufacturing consolidation in the US, it will cease manufacturing operations and close the Detroit facility of Caraco Pharmaceutical Laboratories, a subsidiary of Sun Pharma USA, the US arm of the Mumbai-based Sun Pharmaceutical Industries. Ltd. Earlier this year, Caraco issued a voluntary recall of select bottles of metformin. In 2009, US marshals, at the request of FDA, seized drug products and ingredients manufactured by Caraco at the Detroit facilities as well as two other facilities in Michigan at Farmington Hills and Wixom. The action followed Caraco’s failure to cGMP requirements and the issuance of several voluntary recalls. Caraco corrected the violations and resumed operations in 2012 at the Detroit facility.

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Feature Articles

Teva’s President and CEO Launches New Pivot to Growth Strategy
By

By
Teva’s President and CEO, Richard Francis, who assumed the helm of Teva in January, outlined this week the company’s new strategic framework to drive growth. The company’s Pivot to Growth strategy encompasses four main pillars to deliver short- and long-term growth from the company’s commercial portfolio and biosimilars, innovative pipeline, generics business, and focused capital allocation. 

Tackling Drug Shortages and Supply-Chain Vulnerabilities in the European Union
By

By
Leaders in the European Union (EU) are addressing ways to mitigate drug shortages and supply-chain vulnerabilities in the EU with 19 EU member states supporting a Critical Medicines Act to reduce the EU’s dependence of non-EU countries for APIs, intermediates and other pharma ingredients. What other actions is the EU taking to mitigate supply-chain vulnerabilities?

CDMOs/CMOs: A Roundup of the Latest Expansions in Biomanufacturing
By

By
Several CDMOs/CMOs are proceeding with large-scale investments in new biomanufacturing facilities as biologic drug-substance manufacturing continues to be an active area of investment among CDMOs/CMOs. What companies are expanding production capacity? 

AI & Drug Mfg: Industry Gives Input on FDA’s Discussion Paper
By

By
The bio/pharma industry and other stakeholders have provided input on a recent FDA discussion paper on artificial intelligence (AI) in drug manufacturing as the agency considers a regulatory framework and issues to consider when overseeing AI-based drug manufacturing.