Days after announced its $ 11.75 billion deal to acquire United States-based healthcare company Organon – the Indian drugmaker is putting in place a team to oversee the integration of Organon’s global operations, to be rolled-out once approvals come in, said top representatives of Sun’s management team.
The idea is to have a fully dedicated integration office, with representation from both sides, Sun Pharma’s Managing Director Kirti Ganorkar told businessline. “We can start the planning process, but we can’t take a decision till it (the transaction) is closed officially, which will take six to nine months,” said Ganorkar, a veteran not just with Sun, but also at integration, having joined the company (1996) ahead of its buy of US-based Caraco Pharma (1997).
Subsequently there have been many others, including the acquisition of troubled Ranbaxy and the long-drawn, cross-country buy of Israeli/US company Taro Pharma.
Having been personally involved in acquisitions and in-licensing deals, Ganorkar says, “every acquisition is unique in its nature.” The integration process cannot be approached with the same template used for Taro, or Ranbaxy, he says. “What is a common theme is the people and portfolio,” he adds.
The top management of both Sun and Organon have held townhalls with their respective employees, after the announcement of the transaction earlier this week.
Timelines being drawn
The integration committee is expected to start in less than a month, said Sun Pharma’s Chief Financial Officer Jayashree Satagopan. And it would look at evaluating “portfolios, people, functions, commercial footprint, opportunities for licencing, everything,” she said.
However, both will remain as an independent companies, said Ganorkar, even as Sun eventually looks to delist Organon from the NYSE.
Organon has about 10,000 people, and Ganorkar says, “we have to go systematically because Organon also has good talent. Though they have not grown, but they have run this company successfully. It was a part of Merck. So we also need to assess talent on both sides and then decide…” The India operation is small, and complementary in nature, he added.
With revenues of $ 6.2 billion, Organon is comparable to Sun Pharma in size, and the transaction is expected to be completed by early FY 2027. The combined entity will have revenues of $12.4 billion, catapulting Sun into the top 25 global companies, besides increasing its global footprint in women’s healthcare, innovative products, biosimilars and critical markets like China.
Organon was formed from a spinoff from Merck (known as MSD outside of the United States and Canada, in 2021), and its $8.6 billion debt is a concern, pharma analysts said.
Citing Sun Pharma Founder and Executive ChairmanDilip Shanghvi’s sentiment that they were “debt-averse, not risk averse”, Satagopan said, “it is a very calculated call in terms of looking at an opportunity to grow with the strong balance sheet that Sun currently has… It definitely is a large value compared to what we have ever handled. Therefore, we are extremely conscious of that. And given the fact that both the entities and the combined business will be generating sizable cash on an annual basis, the focus will be to go and repay the debt at an early stage,” she said.