The divestment process for seven brands of medicines is currently in progress as per the India’s antitrust regulator Competition Commission of India (CCI) order for the Sun Pharma's USD 4-billion Ranbaxy deal, stated a Sun Pharma's official spokesperson in a written reply to Pharmabiz.

CCI had cleared the deal on the condition that the two companies divest seven brands of medicines within six months. As per the CCI order, Sun and Ranbaxy were to sell seven brands in which the two merged companies would have “appreciable adverse effect” on competition in India as a result of their market share.

This is the first transaction in which the CCI has proposed any form of structural remedies, which would eliminate the adverse effects on competition which could be caused by a combination, in the opinion of the CCI. This is also the first transaction in India which was examined in the more detailed “Phase II” by the CCI. Informed Avaantika Kakkar, partner, Khaitan & Co. who led the transaction, "This merger application involved a complex, first time, phase II merger in India and involved a sector that is sensitive and subject to much public scrutiny."

Khaitan & Co led discussions with the CCI, in understanding the full meaning and scope of the law and the regulations which were being tested for the first time. It also involved working very closely with the regulator in achieving a balance between the concerns of the regulator and the commercial expectations of the parties involved, not to forget, the many stakeholders that have an interest in ensuring that this merger goes through smoothly.

The antitrust watchdog suggested that Sun Pharma divest all products containing tamsulosin + tolterodine that are currently marketed and supplied under the Tamlet brand name. It has also suggested that Ranbaxy divest all products containing leuprorelin that are currently marketed and supplied under the brand name Eligard. “In the event the divestiture of distribution rights of Eligard is not achieved within the first divestiture period, Sun Pharma shall divest its products containing leuprorelin currently marketed and supplied under Sun Pharma’s brand name Lupride,” CCI said.

The first divestiture has to be done within six months from the effective date. The effective date is the date of the order, which is 5 December. Ranbaxy’s 46.79 per cent equity shareholding in Zenotech Ltd, a listed company, will also vest with Sun Pharma.

The closing date, as defined in its order, is the date when legal title of the divested products move to the purchaser. CCI has also asked the new entity to not acquire any direct or indirect “influence” in the divested products for five years from the closing date.

These seven products constitute less than one per cent of the combined entity’s revenues in India.