Following detailed scrutiny, fair trade watchdog Competition Commission of India has suggested that Sun Pharma and Ranbaxy should make certain changes in their proposed $4 billion merger deal, including possible divestment of some brands, to address anti-competitive concerns.
CCI has finalised its view on the deal, which is the first M&A transaction subject to public scrutiny. Its decision has been conveyed to the parties.
CCI’s move comes even as the foreign investment promotion board (FIPB) cleared the merger to create India's largest pharmaceuticals company and the world’s fifth largest speciality generics manufacturer.
Finance ministry said on Monday that FIPB had approved Sun Pharma’s application for issuing equity shares to the non-resident shareholders and those holding global depository receipts of Ranbaxy following the merger of Ranbaxy into Sun Pharma.
CCI has found the deal prima-facie to be in violation of competition norms, as the "combination is likely to have an appreciable adverse effect on competition."
The deal inked in April has been awaiting CCI clearance. Sources told PTI that the regulator is awaiting response from the parties on the suggested changes.
Among others, CCI is believed to have suggested divestment of some brands in order to comply with competition norms, they added.
The combined entity would have operations in 65 countries with 47 manufacturing facilities across five continents, and would emerge as a significant platform of speciality and generic products marketed globally.
CCI examined substantive issues relating to the molecules market. Public scrutiny of the deal ended on 24 September.
Recent big-ticket acquisitions in the Indian pharma sector include Mylan Laboratories acquiring Agila Specialities from Strides Arcolab for $1.75 billion in 2013 and Torrent Pharma buying the formulations business of Elder Pharma in India and Nepal for Rs 2,000 crore.