Mumbai: After placing a non-binding, $10 billion bid for US-based women’s pharma specialty player Organon, Dilip Sanghavi-led Sun Pharma has upped its bid for the company. According to a report in the Economic Times, the company has submitted a $13 billion binding bid for the company, which could become one of the largest takeovers by an Indian pharmaceutical company.
Besides Sun Pharma, Swedish equity firm EQT and German drugmaker Gruenthal have also bid for the US-listed company. If this deal goes through, Sun Pharma would be able to expand from a generic-heavy manufacturer to a global leader in women’s health and biosimilars.
Strategic Rationale: The “Women’s Health” Moat
For Sun Pharma, Organon offers a rare opportunity to expand its base inorganically, where it can now cover reproductive health and boost its pipeline of biosimiilars that can complement Sun’s existing R&D focus.
Market Reaction: Why Sun Pharma Shares Fell
Sun Pharma’s shares fell 3% on hearing the news. Analysts are concerned that the deal would stretch Sun Pharma’s pristine balance sheet, requiring significant debt financing to meet the requirement of its $13 billion price tag. As a massive global entity, Sun Pharma may find it challenging to integrate its diverse operations across multiple geographies.
