Sun Pharma eyes Novartis' branded portfolio in Japan

Deal, valued at $300-400 mn, may be concluded by December

Sun Pharmaceutical Industries is believed to be in talks with Swiss pharmaceutical giant Novartis to acquire its branded drug portfolio in Japan. If the deal happens, it would be Sun’s second association with Japan. It had acquired Ranbaxy Laboratories from Japan’s Daiichi Sankyo last year.

According to market sources, the deal could be valued at $300-400 million and might be concluded by as early as December.

The deal, if it happens, will enable Sun to gain market access in the world’s second largest pharma market. Sun is India’s largest drug company by sales and it generates half its consolidated revenue from the US market. However, it has limited sales from Japan. In the recent past, Sun executives have spoken about their interest in a larger presence in the Japanese market through acquisitions or partnerships.

Sun did not respond to a query on the subject. In an e-mailed response, a Novartis spokesperson said the company would not comment on rumour and speculation.

After the second quarter results of Sun, managing director Dilip Shanghvi stated the company was evaluating opportunities to expand its global footprint. According to its September-end balance sheet, Sun had cash and cash equivalents of Rs 13,650 crore and long-term and short-term debt amounting to Rs 7,000 crore.

A possible deal with Novartis might enable Sun to realise its Japanese goals.

The Swiss company is facing regulatory heat in Japan over delays in disclosing the side effects of its drugs. In February, Novartis unit in Japan faced a 15-day closure for similar compliance violations. It has also faced charges of manipulating clinical data trials.

According to reports, Japan contributed seven per cent to Novartis’ total sales of $58 billion last year.

While Sun has so far been unable to crack the Japanese market, other Indian generic drug makers have established their presence in the country. Ranbaxy, which was acquired by Sun in 2014, had established a joint venture with a local company, Nippon Chemiphar, in 2005. Ranbaxy itself was acquired by Japanese company Daiichi Sankyo before being taken over by Sun.

Lupin acquired Kyowa Pharmaceuticals in Japan in 2007 and the market now contributes about 10 per cent of its revenue. In the same year, Zydus Cadila acquired Nippon Universal Pharmaceuticals in Japan, but Zydus announced exit from Japan last year.