Exclusive: India’s Sun Pharma in ‘early talks’ to buy rival Intas in blockbuster $2b deal

Exclusive: India’s Sun Pharma in ‘early talks’ to buy rival Intas in blockbuster $2b deal

Photo: Hemant Mishra/Mint
Photo: Hemant Mishra/Mint
Bhawna Gupta
bhawna@dealstreetasia.com December 21, 2015: 
After bringing Ranbaxy into its fold last year, India’s top drug-maker by market value Sun Pharmaceutical Industries Ltd is now setting its sights to acquire local rival Intas Pharmaceuticals Ltd, and is in ‘early talks’ in what could be a Rs 15,000 crore ($2.3 billion) deal, multiple sources familiar with the development told DEALSTREETASIA.

Intas Pharma is among India’s top 15 pharma companies, and counts Singapore’s sovereign wealth fund Temasek as of its investors. It manufactures, markets and sells biosimilars, which are generic versions of biologic drugs.

This cash-cum-stock deal will see Sun Pharma cough up Rs 7,500 crore in cash and issue shares for the remaining amount, said one of the executives who is directly aware of the development and requested anonymity, and is among those quoted above.

If the deal materialises, it will mark Sun Pharma’s second largest acquisition in India after it completed the merger of Ranbaxy in March 2015 in a stock deal valued at $4 billion. That deal had got completed after almost a year of announcing it.

Sun Pharma has hired Kotak Mahindra while Intas Pharma has appointed a leading Mumbai-based advisory firm to lead the mandate for the proposed deal, said another of the executives quoted above.

Founded in 1976, Ahmedabad-based Intas Pharma manufactures tablets, capsules, parenterals and cytotoxic formulations for central nervous system (CNS), cardiovascular, diabetology, gastroenterology, urology, pain management, animal health care, oncology and biotechnology.

In 1996, the company set up a plant in Ahmedabad. Five years later, it started exporting to Europe.

Currently, the company is going to launch Amgen Inc’s white blood cell boosting Neulasta drug in the US which will help it to become first Indian firm to sell biosimilars in the US, according to a Reuters report.

Responding to an email sent by DEALSTREETASIA seeking confirmation and more information on the development, a Sun Pharma spokesperson declined to comment.

In a separate email response, Jayesh Shah, CFO, Intas Pharma, said, “this is baseless and we completely deny the report.”

Kotak Mahindra Capital’s spokesperson also denied to comment on the deal.

In 2014, Temasek bought little over 10 per cent stake in Intas Pharma from PE firm ChrysCapital which invested in the company in 2005 and 2012.

The pharma company, which got SEBI’s approval in September this year to hit the public market, wanted to provide a partial-exit to ChrysCapital through the market route but it later skipped the plan. It also filed papers in 2011 and 2013 for an IPO but could not go ahead with its market debut owing to weak market conditions.

Sun Pharma has been in the news recently for received a warning letter from the U.S. Food and Drug Administration (USFDA) over violation of manufacturing norms in its facility at Halol in Gujarat.

Sun Pharma has been active with acquisitions and divestments this year. Last week, it sold its manufacturing plants in Ohio, US to Nostrum Laboratories. In November 2015, Sun Pharma bought US-based eyecare firm InSite Vision, which became its wholly-owned subsidiary.

2015 has been marked by a surge of M&As, led by healthcare and pharma space. After Sun Pharma-Ranbaxy deal in July, India’s third-largest drugmaker by sales Lupin acquired Russia-based ZAO Biocom for an undisclosed amount. This came a couple of months after it bought Brazil’s Medquímica Indústria Farmacêutica.

In September, another drug maker Cipla acquired US-based InvaGen Pharmaceuticals Inc and Exelan Pharmaceuticals Inc. In May, Strides Arcolab, a Bangalore-based pharmaceutical company, acquired the Australia business of Aspen for $287 million.

India, which is among the global leaders in producing generics, is expected to be one of the top 10 pharma markets by sales and reach a value of around $50 billion by 2020, as per a report by PricewaterhouseCoopers.

Shares of Sun Pharma closed at Rs 754.45 each, down 4.55 percent on BSE in a strong Mumbai market on Monday.

For the quarter ended Sept 30, 2015, Sun Pharma reported a consolidated net profit of Rs 1,106.66 crore, had a loss of 46 percent as compared with last year’s Rs 2,050.22 crore for the same quarter. Its net sales decreased to Rs 6,803.31 crore for the same quarter from Rs 7,979.31 crore in 2014.