Sun Pharma's $11.75 Billion Organon Bet Marks India Inc's Biggest Pharma Buy

(MENAFN- Live Mint) After weeks of anticipation, India's largest drugmaker Sun Pharmaceutical Industries has announced the acquisition of US pharmaceutical company Organon & Co. in a deal worth $11.75 billion, making it one of the largest overseas acquisitions by an Indian company.

Sun Pharma will acquire all outstanding shares of Organon for $14.00 per share in an all‐cash transaction with an enterprise valuation of $ 11.75 billion, the company said in an exchange filing early on Monday.

“The proposed acquisition of Organon is aligned with Sun Pharma's strategy of growing its Innovative Medicines business,” Sun Pharma said in the filing, adding that the deal enables its entry into biosimilars as a top-10 global players, as well as among top 25 global pharmaceutical companies with a combined revenue of $12.4 billion and bumps its innovative medicines revenue share to 27%.

The deal will be funded through a combination of available cash resources and committed financing from banks, the company said. With the acquisition, Sun Pharma will also be inheriting Organon's debt worth $8.6 billion.

Organon was spun off from Merck in 2021 for its women's health, legacy general medicine brands, and biosimilars businesses. The deal would push Sun further into the high-margin specialty/innovative branded market in the US, a longstanding goal of the company.

Also Read | Why Sun Pharma's hefty bid for Organon has divided investors

Sun Pharma's interest in Organon was first reported by Economic Times in January, which later reported that the drugmaker had submitted a binding offer to buy the company on 24 April.

While Sun Pharma's share price closed 3.6% lower on the NSE on Friday, Organon's stock has gained over 86% on the NYSE in the last month, following reports of its acquisition, bringing its market capitalization to $2.93 billion. However, its stock has dropped 11.5% over the past year.

This is the largest overseas deal by an Indian company after Tata Steel's Corus buy for $12 billion in 2007.

Also Read | Overseas bound: Indian drugmakers shop abroad as they move away from generics Strategic push

While Sun Pharma's track record of extracting value from acquisitions, helmed by founder Dilip Shanghvi, sparks confidence among some industry watchers, Organon's huge debt remains a concern.

Organon reported a revenue of $6.2 billion in FY25, down 3% year-on-year, with adjusted Ebitda of $1.91 billion, implying a 30.7% adjusted Ebitda margin. The company said in its full-year results report in February that it expects to deliver approximately $6.2 billion of revenue and approximately $1.9 billion of adjusted Ebitda for full year 2026.

The deal would boost Sun's US sales of both generic and specialty medicines, as well as give it a larger push in the biosimilars market. The drugmaker is the fifth largest generics player in the US.

Organon reported over $1.6 billion in North America sales in FY25.

Sun's track record

Sun Pharma has built much of its scale through a steady, decades-long acquisition strategy, evolving from small domestic buyouts in the 1990s, such as Tamil Nadu Dadha Pharmaceuticals, into increasingly global deals.

Its early international push began with the acquisition of Caraco Pharmaceuticals in 1997, followed by a series of smaller purchases across manufacturing and generics. The strategy shifted materially in the 2010s, starting with a controlling stake in Taro Pharmaceuticals in 2010 to effectively double its US business. The firm went on to acquire Ranbaxy Laboratories in a landmark $4 billion deal in 2014, making it the world's fifth largest specialty generic pharmaceutical company.

Since then, Sun Pharma has focused on targeted acquisitions to deepen specialty and geographic capabilities, buying firms like Concert Pharmaceuticals and Checkpoint Therapeutics, and fully acquiring Taro in 2024, as it moved from a focus on scale to innovation.

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