MUMBAI: Sun Pharmaceutical Industries, the largest domestic pharma major with $6.2 billion in annual revenues, has announced its largest acquisition till date, snapping up the New Jersey-based Organon for $11.75 billion in an all-cash deal, making it the second-largest outbound deal in the history of India Inc after the $14-billion Corus Steel takeover by Tata Steel in 2008. The combined entity will make the Dilip Shanghvi-led company among the world’s top 25 pharma companies with over $12.4 billion in annual turnover and gives direct entry into the multibillion-dollar biosimilar market, apart from the Chinese, Korean, and South American markets where Sun currently has no presence.
Under the deal announced Monday, “Sun will acquire all outstanding shares of Organon for $14 a share in an all-cash transaction, valuing the NYSE-listed company at an enterprise valuation of $11.75 billion,” Shanghvi told reporters here on Monday.
Of the total payout, Sun, which is a net debt-free company with over $1.9 billion in free cash flow, will pay around $2.5 billion in equity, and the rest will be debt-funded, for which the company has already tied up with lenders. From a debt perspective, Sun will be leveraging around 2.3x its EBITDA for the deal, but Shanghvi was categorical in stating that shareholders will continue to receive annual dividends, as he is confident of retiring the debt in a short span of time.
Organon is a global healthcare company formed through a spin-off from Merck, known as MSD outside of the US and Canada, in 2021. Organon has a legacy of 100 years of deep trust and strong brand equity among doctors, patients, regulators, and other stakeholders. A global leader in women’s health—contraceptives and fertility drugs, where it ranks second and third globally—the company’s portfolio includes more than 70 products across women’s health and general medicines, including biosimilars, commercialized across 140 countries, with the US, Europe, China, Canada, and Brazil among its largest markets. This broader market presence will expand Sun’s 110-market access by adding 30 more entirely new markets, including the $150 billion Chinese market.
This global footprint is supported by six manufacturing facilities across the European Union and emerging markets, reinforcing Organon’s scale and reach.
The acquisition, likely to be completed by the first quarter of 2027, is aligned with Sun Pharma’s strategy of growing its business. The deal also enables Sun’s entry into biosimilars as a top-10 global player. Organon’s portfolio, global footprint, and strong stakeholder relationships shall complement Sun’s existing strengths and enhance long-term value creation.
Shanghvi said that upon successful consummation of the transaction, Sun is poised to be: among the top 25 global pharmaceutical companies with combined revenue of $12.4 billion, a leading player in Established Brands/Branded Generics, a more Innovative Medicines-focused company with 27% revenue share, among the top 3 companies in global Women’s Health, creating a commercial platform for future growth, and the seventh-largest global biosimilar player with presence in 150 countries, with 18 large markets, each generating over $100 million in revenue.
Kirti Ganorkar, Managing Director of Sun, said, “This transaction is a logical next step in strengthening Sun’s global business. Together, we will become a partner of choice for acquiring and launching new products. Our immediate priorities will be business continuity, disciplined integration, and responsible value creation. We see strong potential in leveraging Organon’s talent pool. In addition, there is scope for synergy, including significant revenue upside opportunities to be realized over the coming years.”
Carrie Cox, chairperson of Organon, said, “Following a comprehensive review of strategic alternatives, our board determined that this all-cash transaction offers compelling and immediate value to Organon stockholders. We believe Sun Pharma is well positioned to support Organon’s businesses, employees, and patients globally, and to further advance our commitment to delivering impactful medicines and solutions.”
Sun has been growing through acquisitions in the past, having completed nearly a dozen deals, including Ranbaxy in 2015 and the Israeli pharmaceuticals major Taro in 2010, among others.