Adding weightage to the view that Ranbaxy and Sun Pharma merger may have a significant presence in the anti- diabetic and cardiology segments, data compiled by IMS Health indicate that Sun Pharma is growing at 19.3 per cent and Ranbaxy at 0.6 per cent showing a combined growth of 16 per cent in the anti-diabetic segment and a combined market domination of 8.34 per cent. The data also indicates that 2.5 per cent growth is shared by Ranbaxy and 10.7 per cent by Sun Pharma accounting for a combined growth of 7.7 per cent in the cardiac segment with a combined market share of 11.94 per cent.
Market share of Ranbaxy at 1.26 per cent is however less than Sun Pharma at 7.08 per cent in anti-diabetic segment and again in cardiac segment with Ranbaxy at 2.5 per cent and Sun Pharma at 10.7 per cent.
Sun Pharma’s acquisition of Ranbaxy Laboratories Ltd has recently hit a major hurdle, with the antitrust body, the Competition Commission of India (CCI) issuing show cause notices to both companies asking why a public investigation should not be ordered into the deal based on the possibility that it could affect the prices of essential life-saving drugs in the domestic market.
Speculations are rife that the entity will have a significant presence in the market in the diabetic and cardiology segments with the clearance of the deal. On the basis of data provided by IMS Health, the market size of combined entity would be 8.5 per cent. Abbott will be the second company at 6.5 per cent. It also indicates that the combined entity holds Rs. 5,16.1 crore of Rs. 6,200 crore Diabetes market in India growing at a rate of 18 per cent. In the cardiology segment, it holds Rs. 1,145.8 crore market of the Rs. 9,599 crore cardiology market growing at a rate of 9 per cent. Both entities combined together are growing at 16 per cent in the diabetic segment and 7.7 per cent in the cardiac segment.
Also, of the leading 10 therapy segments that make up 90 per cent of the total pharma market, the combined entity is among the top four suppliers. These therapy segments include neuropsychiatry at 16 per cent, cardiology at 16 per cent, anti-infectives at 13 per cent, gastroenterology at 10 per cent, pain & analgesics at 8 per cent, dermatology at 6 per cent, gynaecology at 6 per cent and respiratory at 4 per cent, diabetology at 8 per cent and others at 13 per cent.
Sun Pharma’s acquisition of Ranbaxy is uncommon in the pharmaceutical sector with one Indian company buying a local competitor which will have estimated annual revenue of $4.2 billion (about Rs. 25,200 crore). The Sun-Ranbaxy transaction is the first merger deal that has received a show -cause notice since India amended the merger control provision in 2011. Under India’s Merger and Acquisition (M&A) Rules, companies need CCI’s approval 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.
On April 6, Sun Pharma agreed to buy Ranbaxy for $3.2 billion in stock from its Japanese parent Daiichi Sankyo Co. Ltd. It also agreed to take on $800 million of Ranbaxy’s debt. The antitrust body is especially concerned about the 46 drug formulations that will constitute the merged entity’s portfolio and in which the entity will have a significant presence in the market.
CCI has so far cleared most merger and acquisition applications that have come before it. Since 2011, CCI has cleared some 165 deals, including 46 in 2013 and more than 30 so far this year, according to data available on its website.