The Sun Pharma management said the combined entity would have a 9 percent market share in the Indian pharmaceutical market. It would also have presence in 55 markets across the globe, and revenues of around USD 1 billion from emerging market sales.
Sun Pharma expects to save USD 250 million in operating synergies from the merger of Ranbaxy with itself, over the next three years.
In the same breath, the management also said the first priority would be to ensure compliance with regulatory standards, and only after that would it be focusing on synergy benefits.
Ranbaxy was censured by the USFDA for manufacturing violations, and exports to the US from its four plants have been barred.
On the positive side, the deal would make the merged entity the biggest Indian pharmaceutical company in the US market, Sun Pharma told analysts and investors in its conference call to discuss the deal.
In addition, the merger will provide Sun an entry into the over-the-counter drug market in the US, and also make it the third largest dermatological player in that market.
The Sun Pharma management said the combined entity would have a 9 percent market share in the Indian pharmaceutical market. It would also have presence in 55 markets across the globe, and revenues of around USD 1 billion from emerging market sales.
Sun Pharma justified the valuation of the Ranbaxy deal, and said it expected Ranbaxy's operations to become profitable 'in short time.' The management, however, refrained from giving any specific timeline on how soon it expected the turnaround.
Sun pointed to its strong track record of successfully managing acquisitions in the past. It said that Taro's (which it had acquired in 2010) operating profit had risen four-fold to USD 400 million since the time when Sun took control of the Israeli firm.
It said it had recovered the USD 80 million-odd it had paid to acquire URL Pharma in late 2012.
What makes the Ranbaxy turnaround challenging is the series of regulatory action from the USFDA in recent times, leading to steep erosion in profitability and profits.
Sun Pharma said it would continue with the agreements that Daiichi Sankyo, has with Ranbaxy. The Japanese firm is the current owner of Ranbaxy, having bought it from erstwhile promoters, the Singhs, in June 2008 for USD 4.6 billion.
Sun said there were no plans as of now to take Ranbaxy out of any market. Ranbaxy's exports to the US has been hit by the USFDA's ban on its plants at Dewas, Toansa, Paonta Saheb and Mohali.
Sun Pharma stock price
On April 07, 2014, at 11:12 hrs Sun Pharmaceutical Industries was quoting at Rs 580.25, up Rs 8.35, or 1.46 percent. The 52-week high of the share was Rs 653.10 and the 52-week low was Rs 423.18.
The company's trailing 12-month (TTM) EPS was at Rs 0.95 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 610.79. The latest book value of the company is Rs 41.64 per share. At current value, the price-to-book value of the company is 13.93.
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