In the 90s, Sun Pharmaceuticals was a rising star. Other pharmaceutical majors Ranbaxy and Dr Reddy‘s looked at its growth with interest. Three decades later Dilip Shanghvi bought over Ranbaxy from Japan’s Daiichi-Sankyo to chart his company’s growth curve. In a move to become world’s fifth largest generics (or off-patent) drugs company by revenue and India’s largest pharma firm by market share, Sun Pharmaceutical Industries Ltd (“Sun Pharma”) announced the acquisition of Ranbaxy Laboratories Ltd (“Ranbaxy”) in April 2014.

However, legacy issues with Ranbaxy and reports of a complaint by a whistleblower to the Securities and Exchange Board of India (SEBI) against Sun Pharma raising issues of corporate governance has put Sanghvi into a tough quagmire. The whistleblower’s complaint, on transactions worth over Rs 5,800 crore between 2014-2017, alleges that Indian drugs manufacturer Aditya Medisales Ltd had transactions with Suraksha Realty, controlled by Sun Pharma’s co-promoter, Sudhir Valia. The whistleblower has alleged numerous irregularities against Sun Pharma promoter Dilip Shanghvi, his brother-in-law Sudhir Valia and Dharmesh Doshi, an associate of the 2001 stock market scam convict Ketan Parekh. All these have put pressure on Sun Pharma and shareholders and the company now needs to look at a quick turnaround.

Ranbaxy Laboratories Limited, established in 1961, was an integrated, research based, an international pharmaceutical company producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. It was having operations in 43 countries and 21 manufacturing facilities spread across 8 countries. Ranbaxy was a member of the Daiichi Sankyo Group. Daiichi Sankyo acquired controlling in Ranbaxy in 2008 from its earlier promoters Malvinder Singh and family.

The Transaction

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