The Sun-Ranbaxy Merger

Sun-Ranbaxy USD 4 billion merger completed

The two firms have received nod from the Competition Commission for sale of seven brands to Emcure Pharma to comply with the fair trade watchdog’s conditional nod for their merger. In an order issued yesterday, CCI approved the deal with Emcure, which would purchase the ‘divestment products’ that were ordered to be sold in an earlier direction issued in December last by the Competition Commission of India (CCI). These seven brands were at the core of the CCI’s contention that the merger between Sun Pharmaceutical Industries and Ranbaxy Laboratories was ‘prima-facie’ in violation of competition laws and therefore the regulator had ordered divestment of those products under its ‘conditional’ approval to the deal. In December, 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.

Read more at: http://www.moneycontrol.com/news/business/sun-ranbaxy-usd-4-billion-merger-completed_1338347.html?utm_source=ref_article

Remedying the Problems in Merger

Commission often provides remedies to the problems of merger so that the deal can get green signal.

In Phase I mergers cleared by European Commission – Pfizer/Wyeth[22] between two originators ultimately raised no issues in the area of human pharmaceuticals but was cleared subject to a number of divestments relating to animal-health vaccines, animal-health pharmaceuticals and medicinal-feed additives. Abbott/Solvay Pharmaceuticals[23] raised competition concerns in relation to certain IVD genetic testing products. Abbott submitted divestment commitments in relation to CF testing.

DEAL BETWEEN SUN-RANBAXY:

 

·      It was on 6th April, 2014 that Sun Pharma agreed to buy Ranbaxy at $3.2 billion in stock from its parent Daiichi Sankyo Ltd, creating the largest pharmaceutical company with an 8.5% share of India’s pharmaceutical market, worth an annual Rs.76,000 crore by sales.

·      As per the Merger and Acquisition (“M&A”) Rules, companies need to take CCI’s approval for mergers if the combined assets of the two entities are worth more than Rs.1,500 crore or sales amount to more than Rs.4,500 crore in India[1].

·      The investigations conducted by CCI found that the proposed merger would lead to high concentration in forty six drug categories and hence instead of showing a green signal in the first phase, CCI sent a show cause notice to the companies taking the merger investigations to phase II for the first…

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