Bain Capital-backed Emcure to buy half a dozen products from Sun Pharma-Ranbaxy

The Competition Commission of India (CCI) has approved the acquisition of around half a dozen products currently made and sold by Sun Pharmaceutical Industries Ltd and Ranbaxy Laboratories Ltd by privately held Emcure Pharmaceuticals Ltd.

The deal, whose value is not disclosed, is linked to the $4 billion acquisition of Ranbaxy by Sun Pharma. CCI had approved the proposed deal between Sun Pharma and Ranbaxy last December but had asked the firms to divest certain assets to allay concerns of competition in the market.

CCI had asked Sun Pharma to sell all products containing Tamsulosin + Tolterodine, which are currently marketed and supplied under the Tamlet brand name. It had separately asked Ranbaxy to divest six products currently sold under the brands Terlibax, Rosuvas EZ, Olanex F, Raciper L, Triolvance besides all products containing Leuprorelin which are currently marketed and supplied under the Eligard brand name.

The competition regulator had added if the divestiture of distribution rights of Eligard by Ranbaxy is not achieved initially, Sun Pharma shall divest its products containing Leuprorelin currently marketed and supplied under its own brand Lupride, to meet the divestment conditions.

These seven products together constitute less than 1 per cent of the combined entity's revenues in India, Ranbaxy said. The combined entity's pro-forma revenues for the 12 months ended December 31, 2013 was pegged at $4.2 billion.

CCI, which had appointed PricewaterhouseCoopers Pvt Ltd as the monitoring agency to assess the impact of Emcure's buyout of the seven products, noted that in respect of three trademarks—Rosuvas EZ, Olanex F and Raciper L, instead of assignment, Sun-Pharma have proposed to license them exclusively, perpetually, irrevocably and on a royalty free basis with the right to sub-license, to Emcure.

Emcure has submitted that it is satisfied with the license arrangement being proposed and it does not require assignment of the said trademarks as the license as above, would suffice to enable it to independently sell and market the said three products.

CCI has given its approval to the deal with Emcure and thereby given its final consent to the buyout of Ranbaxy by Sun Pharma.

Meanwhile, Sun Pharma has also obtained approval of the Reserve Bank of India (RBI) to issue its shares to non-resident holders of securities of Ranbaxy Laboratories and transfer of Ranbaxy’s overseas investments to Sun Pharma as a part of its proposed merger.

Recently, the merger received approval from the High Court of Punjab and Haryana and the US Federal Trade Commission (FTC).

With the approvals from CCI and RBI, Sun Pharma and Ranbaxy have cleared all the regulatory blocks in the way of the proposed $4-billion merger deal, which would create the country's largest pharmaceutical company.

This would be the biggest domestic M&A deal ever and by far the top pharma deal in local currency terms. The deal would also create world’s fifth-biggest generics drug maker with operations across 65 countries, 47 manufacturing facilities in five continents and a global portfolio of specialty and generic products.

For Emcure, the transaction would strengthen its business in India. Emcure is ranked among the top 15 pharmaceutical companies in India in terms of market share based on domestic sales. It is ranked much higher in the therapeutic areas in which it operates: cardiology, pain and analgesics, HIV, gynecology, nephrology, anti-infective, and vitamins, minerals and nutrients.

A little over a year ago, PE major Blackstone sold its entire equity stake in the Pune-based drugmaker to Bain Capital for an undisclosed amount. Emcure was the first private equity investment by a Blackstone managed fund in India and it was previously looking to part-exit through an initial public offer (IPO). However, with Blackstone getting an exit through a secondary PE deal, the IPO was withdrawn.

Last August, global pharmaceutical major Sanofi entered into a marketing and distribution agreement with Emcure for its oncology portfolio in India. According to the agreement, while Sanofi will continue to own its oncology range - comprising four brands namely Taxotere, Jevtana, Fludara and Fasturtec; Emcure will market and distribute these brands through its specialty unit.

(Edited by Joby Puthuparampil Johnson)

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