Court stops Ranbaxy takeover
pharmafile | May 6, 2014 | News story | Manufacturing and Production, Sales and Marketing | Ranbaxy, Sun Pharma, fad, manufacturing
An Indian court has stopped the sale of Ranbaxy Laboratories to Sun Pharmaceutical Industries after concerns were raised over insider dealing, according to media reports.
Sun agreed to buy struggling drugmaker Ranbaxy – which is majority-owned by Japan’s Daiichi Sankyo – last month in a $3.2 billion deal that will see the two companies become the biggest in their native India.
The Financial Times says the Andhra Pradesh High Court has ordered that the deal be put on hold while judges rule on petitions, which are requesting an investigation into whether any insider trading of Ranbaxy shares took place.
The concerns were raised after Ranbaxy shares jumped 24% while trading volume tripled in the three sessions ahead of the deal being made public, suggesting that some inside information may have been used.
Reports emerged a few days after the deal that news might have been leaked prior to its formal announcement, with Reuters saying that India’s market regulator was to ask the two companies for more information and seek trading data from stock exchanges.
Despite the uncertainty which the court’s decision casts over the deal, the combination of Sun and Ranbaxy would create the fifth-largest speciality generics company in the world, with operations in 65 countries and 47 manufacturing facilities across five continents.
On a pro forma basis, the combined revenues from the business are estimated at around $4.2 billion, based on last year’s sales and Sun said it expects to realise revenue and operating synergies of around $250 million as a result of the deal.
However, there is another cloud on the horizon in the shape of concerns over the quality of prescription drugs consumed in the US – and FDA investigators are directly targeting Indian drug plants such as Ranbaxy’s under new quality control measures.
The company has already endured import bans on drugs manufactured at a number of its facilities.
Adam Hill
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