After weeks of anticipation, India’s largest drugmaker Sun Pharmaceutical Industries announced the acquisition of American pharmaceutical company Organon & Co. valued at $11.75 billion, making it one of the largest overseas acquisitions by an Indian company.
Sun Pharma will acquire all of Organon’s outstanding shares for $14.00 per share in an all-cash transaction valuing the company at $11.75 billion, the company said in an exchange on Monday.
“The proposed acquisition of Organon is in line with Sun Pharma’s strategy to expand its innovative medicine business,” Sun Pharma said in a filing, adding that the deal places it in biosimilars as a top 10 global player as well as among the top 25 global pharmaceutical companies with total revenue of $12.4 billion and increases its share of innovative medicine revenue to 27%.
The transaction will be financed by a combination of available cash resources and committed financing from banks, the company said. With the acquisition, Sun Pharma will also inherit $8.6 billion of Organon’s debt.
Organon spun off from Merck in 2021 for its women’s health, legacy generics and biosimilars businesses. The deal would push Sun further into the high-margin specialty/innovative brand market in the US, a long-term goal of the company.
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Sun Pharma’s interest in Organon was first reported in January by the Economic Times, which later reported that the drugmaker made a binding offer to buy the company on April 24.
While Sun Pharma’s share price closed 3.6% lower on the NSE on Friday, Organon shares on the NYSE have gained more than 86% in the past month on news of its acquisition, bringing its market capitalization to $2.93 billion. However, its shares have fallen 11.5% over the past year.
It is the largest overseas deal by an Indian company since it bought Tata Steel’s Corus for $12 billion in 2007.
Read also | Overseas: Indian drugmakers buy abroad as they move away from generics
Strategic pressure
While Sun Pharma’s track record of extracting value from acquisitions, led by founder Dilip Shanghvi, inspires confidence among some industry observers, Organon’s huge debt remains a concern.
Organon reported FY25 revenue of $6.2 billion, down 3% year-over-year, with adjusted Ebitda of $1.91 billion, for an adjusted Ebitda margin of 30.7%. The company said in its full-year earnings report in February that it expects to achieve about $6.2 billion in revenue and about $1.9 billion in adjusted Ebitda for the full year 2026.
The deal would boost Sun’s US sales of both generics and specialty drugs and give it a bigger push in the biosimilars market. The drugmaker is the fifth largest producer of generic drugs in the US.
Organon reported sales of over $1.6 billion in North America in FY25.
A record for Sun
Sun Pharma has built much of its scale through a steady, decades-long acquisition strategy, evolving from small domestic buyouts in the 1990s, such as Tamil Nadu’s Dadha Pharmaceuticals, to increasingly global businesses.
Its early international push began with the acquisition of Caraco Pharmaceuticals in 1997, followed by a series of smaller purchases across manufacturing and generics. The strategy changed substantially in 2010, starting with a controlling stake in Taro Pharmaceuticals in 2010 to effectively double its US business. The firm bought Ranbaxy Laboratories in a landmark $4 billion deal in 2014, making it the world’s fifth largest specialty generic pharmaceutical company.
Since then, Sun Pharma has focused on targeted acquisitions to deepen specialty and geographic capabilities, buying firms such as Concert Pharmaceuticals and Checkpoint Therapeutics and fully acquiring Taro in 2024 as it moves from a focus on scale to innovation.
