Beginning today, integration to focus on enhancing productivity and value creation initiatives to deliver US$ 250 mn synergies in Year 3
Combined entity structure to create opportunities for strong talent Growth – Growing Together is the theme of combined culture.
- 100% compliance, enhancing R&D productivity & strong business growth are the key priorities for Sun Pharma as combined entity
- Announces Management Leadership Team to lead combined entity’s next growth phase
- Plans strong team of Functional Leaders drawing best of Sun Pharma & Ranbaxy
Mumbai, India: March 25, 2015 – Sun Pharmaceutical Industries Ltd. (Reuters: SUN.BO, Bloomberg: SUNP IN, NSE:SUNPHARMA, BSE: 524715), today, begins the integration of Ranbaxy’s business following the successful closure of its merger. The integration, planned by Sun Pharma over many months, will focus on supporting strong growth. The merger has fortified Sun Pharma’s position as the world’s fifth largest specialty generic pharmaceutical company and the top ranking Indian Pharma company with significant lead in market share. The combined entity’s manufacturing footprint covers 5 continents with products sold in over 150 nations with a stronger presence in US, India, Asia, Europe, South Africa, CIS & Russia and Latin America. Sun Pharma now offers a large basket of specialty and generic products encompassing a broad range of chronic and acute prescription drugs as well as a ready foray into the global consumer healthcare market. Post-merger, Daiichi Sankyo becomes the second largest shareholder in Sun Pharma and both companies will work together to leverage this relationship for global business growth. The integrated culture theme, “Growing Together”, represents the core objective of this merger focusing on improving productivity, compliance commitment, focus on quality and sustainable growth. Through this merger Sun Pharma emerges as India’s first truly global pharmaceutical company.
The combination allows Sun Pharma to:
- Significantly expand its R&D capabilities and global presence, especially across emerging markets
- Enhance product portfolio and market depth in India, US as well as Rest of the World markets
- Improve strategic flexibility, ability to pursue partnerships and strengthen M&A bandwidth
Following the closure of this transaction, Ranbaxy will be delisted from the Indian Stock Exchanges. Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. On pro forma basis for 12 months ended December 2014, Sun Pharma’s gross margin stands at 76% (Industry average 62%); EBIDTA margin at 32% (industry average 19%) and Net margin at 20% (Industry average 12%).
Mr Israel Makov, Chairman, Sun Pharma said, “The combined entity will capitalize on the expanded global footprint and enhance our dominance as a world leader in the specialty generics landscape. Sun remains committed to uncompromised product quality, 100% compliance and promotes innovation to create the most dynamic global specialty generics pharmaceutical company. We believe that our shareholders, customers and employees will share our excitement in the potential of this combination and thank them for their continued support.”
TOP PRIORITIES FOR COMBINED ENTITY
Sun Pharma has identified three key priority levers to drive growth in the combined entity
- Achieving 100% compliance in manufacturing in line with Regulator expectations
- Increase R&D productivity to introduce new innovative products
- Strong business growth across US, India, and Rest of the World markets
Commenting on the combined entity’s priorities, Mr Dilip Shanghvi, Managing Director, Sun Pharma further added: “It is an important milestone in the history of Sun Pharma as we enter into a new phase of growth. We will continue to focus on gaining trust of the Regulators globally while continuing to develop products based on patient needs and leverage them to become brand leaders globally.”
Over the last 10 months, Sun Pharma and Ranbaxy’s joint functional teams put together the integration blueprint with direction from Integration Management Office (IMO). The IMO will continue to oversee the implementation of the functional integration process. The integration will emphasize on productivity enhancement, aligning best functional requirements and employee talents in the combined entity. Any structural re-alignment will focus on clear benefits assessment to synchronize Company’s long term goals and integration of a culturally diverse combination. This merger strengthens Sun Pharma’s foundation with a strong & multi-cultural team of over 30,000 people representing over 50 global cultures making the combined entity a truly global corporation in spirit & scale.
Remediation at manufacturing units which are currently in deviation from cGMP norms will remain a critical focus. Sun Pharma is working with global consultants assisting its internal teams to achieve compliance objectives. It has formalized an operational blueprint for realizing its US$ 250 million synergy target for year-3 through significant value creation across functions. The integration will cover all functions and markets globally.
Leading the integration process will be Sun Pharma’s Leadership Team comprising members from Sun Pharma and Ranbaxy. This team draws upon the expertise, collective industry experience and proven track record within Sun Pharma & Ranbaxy organisations. The leadership team is also responsible for leading Sun Pharma’s next phase of growth as it deepens penetration in existing markets while the merger enables it to enter new therapies. Each Leadership Team member will lead an expanded Functional Management Team. This Functional leadership pipeline draws best of talents from both Sun Pharma and Ranbaxy identified through detailed capability assessment undertaken by a global talent management firm.
The combined entity’s leadership structure design was guided by the following factors:
- Allow focus on priority areas and institutionalize imperatives in R&D & Quality
- Support strong and sustainable revenue growth across US, India & Rest of the World.
- Promote learning through best practices of Sun Pharma & Ranbaxy
- Create opportunities for talent to grow together
- Minimise disruptions by undertaking modification only in case of clear benefits
The combined entity comprises best intellectual capital, capability of nearly 1,800 scientists and the ability to Invest significantly in R&D. The focus of R&D investments will be to harness multiple capabilities and technologies for developing complex products in addition to the combined entity’s core business of offering affordable generic medicines. The combined entity will continue developing innovative and complex generics that boast of technical differentiators.