Investors bet Sun Pharma could restore Ranbaxy to health

new delhi — On the surface, Sun Pharma’s $3.2 billion purchase of Indian generics rival Ranbaxy, which is in deep trouble with US regulators over safety lapses, may not look like a great deal.

But Sun Pharmaceutical Industries’ shares rocketed on last week’s announcement it was buying Ranbaxy from Japanese drugmaker Daiichi Sankyo, which struggled unsuccessfully to resolve the Indian company’s regulatory woes after its 2008 $4.6-billion acquisition.

Investors gave the thumbs-up, banking on Sun’s history of nursing ailing companies back to health and the new clout it will gain in the fast-growing global generics market.

“It’s a risk, but well-calculated and backed by Sun’s track record of turning around troubled assets,” D.G. Shah, secretary-general of industry group Indian Pharmaceutical Alliance, told AFP.

Sun, with its decades of experience in formulating knock-off drugs that have brought it alliances with US giants such as Merck, “is like a white knight to bail out Ranbaxy from the FDA mess”, Shah said.

For Sun, pluses far outweigh minuses because the purchase will give it a broader range of drugs in its medicine cabinet, a robust drug pipeline and a wider geographical reach, analysts say. —