Over the weekend, drug maker Sun Pharmaceutical Industries disclosed its proposal to mop up all outstanding shares in Israeli drug maker Taro Pharmaceuticals, a move that will require Sun to fork out $300 million.
Taro’s board has appointed a committee to evaluate the offer and they will decide on taking this further. On Sun’s part, its Chief Financial Officer CS Muralidharan said, they would work with the special committee and advisors appointed by Taro, to make this transaction beneficial and a “win-win” for both organisations.
The last time Sun had undertaken a similar exercise about 10 years ago, it had run into opposition from a section of minority shareholders, resulting in the Mumbai-based drug maker eventually dropping the plan in 2013. Sun had made its $454 million plan for Taro in 2007, and it presently holds over 78 per cent equity in the company.
Objective
Responding to a query on the timing of the latest offer, Muralidharan told businessline, the company had been running buy back programmes-about “two or three times in the last two to three years”. Getting full control of Taro would enable, among other things, the delisting of the company from NYSE, he said. There will not be a constraint in funding this transaction, he said, without outlining details.
In a separate development, Sun’s board approved two new appointments, including Aalok Shanghvi ((Son of the Managing Director Dilip Shanghvi) as a whole-time Director for five years, from June 1, 2023. The other appointment was Rolf Hoffmann as Independent Director.
Poised for growth
On the financial outlook for the current year, the CFO said, all businesses were poised for growth. Their global specialty business, for instance, clocked revenues of $871 million, up 29 per cent over same period last year. The United States and India markets are critical to Sun’s growth, and both face pricing pressures due to multiple reasons.
The situation in the US also depended on a company’s product portfolio, he said, without getting into specifics. The India market has seen government-directed price control and an opportunity to increase prices in line with the WPI. Against this backdrop, he said, companies would not be inclined to take major price increases, given the competitive marketplace. They would look at volumes growth and to tighten operational efficiencies to soften the impact, he indicated.
Research spends for Sun would be across specialty and generic pipelines, he said. For the 12 months ended March 31, 2023, Sun’s consolidated research spends stood at ₹2,367 crore, or 5.5 per cent of sales. It’s specialty pipeline includes five molecules undergoing clinical trials, it said.