SUN PHARMA makes speciality pharmaceuticals and active pharmaceutical ingredients. Our brands are prescribed in chronic therapy areas like cardiology, psychiatry, neurology,gastroenterology, diabetology and respiratory. They have the same drive for growth that marked our early days. Sun Pharma came into existence as a startup with just 5 products in 1983. In the time since, we have crossed several milestones to emerge as a leading pharma company in India, a rank that we have now been at for more than 5 years. (IMS-ORG Retail Store Audit, March 2006) They have reached leadership in each of the therapy areas that we operate in, and are rated among the leading companies by key customers. Strengthening market share and keeping this customer focus remains a high priority area for the company. In the post 1996 years, they have used a combination of internal growth and acquisitions to drive growth; important mergers were those of the US, Detroit based Caraco Pharm Labs and that of the plant at Halol which is now UKMHRA and USFDA approved . Under a recent corporate development, the areas related to new molecular entities and drug delivery systems are proposed to be demerged into a separate company.
HISTORY
Sun Pharma began in 1983 with just 5 products to treat psychiatry ailments. Sales were initially limited to 2 states - West Bengal and Bihar. Sales were rolled out nationally in 1985. Products that are used in cardiology were introduced in 1987, and Monotrate, one of the first products launched at that time has since become one of our largest selling products. Important products in Cardiology were then added; several of these were introduced for the first time in India.
Realizing the fact that research is a critical growth driver, they established their research center SPARC in 1993 and this created a base of strong product and process development skills.
Sun Pharma was listed on the main stock exchanges in India in 1994; and the Rs. 55 crore issue of a Rs. 10 face value equity share at a premium of Rs. 140/- was oversubscribed 55 times. The minimum 25% that was required under the regulations then for listing was offered to the public, the owner family continues to hold a majority stake in Sun Pharma. We used this money to build a greenfield site for API manufacture, as well as for acquisitions. For the acquisitions, typically companies or assets that could be turned around and brought on track were identified.
Another API plant, the Ahmednagar plant, was acquired from the multinational Knoll Pharmaceuticals in 1996, and upgraded for approvals from regulated markets, with substantial capacity addition over the years. This was the first of several sensibly priced acquisitions, each of which would bring important parts to the long-term strategy.
By 1997, their headquarters were shifted to Mumbai, the commercial capital of the country. Sun pharma began on the first of their international acquisitions with an initial $7.5 million investment in Caraco Pharm Labs, Detroit. By 2000, they had completed 8 acquisitions, each such move adding new therapy areas or offering an entry to important international markets. A new research center was set up in Mumbai for generic product development for the US market. In India, as new therapy areas were entered into post acquisition; customer attention, product selection and focused marketing helped us gain a foothold in areas like orthopedics, gynecology, oncology, etc. From a ranking at 38th in 1994, by 2000 we were ranked 5th with a leadership in 8 of the 11 therapy areas that we are present in. The year 2000 was the year of turnaround at the US subsidiary, Caraco, as it began to receive approvals after successful inspection by the USFDA. In December 2004, a research center spread over 16 acres was inaugurated by the President of India, with special lab space for drug discovery and innovation. The post 2005 years have witnessed important acquisitions to strengthen our US business- the purchase of manufacturing assets for controlled substances in Cranbury,NJ; that of a site to make creams and lotions in Bryan, that of Alkaloida, a Hungary based API and dosage form manufacturer , and recently, Chattem Ltd., a Tennessee-based controlled substance API manufacturer.
MANUFACTURING
With worldclass technology and a team of strong professionals, sun pharma has built sites and systems that meet the most stringent international manufacturing standards. Expert quality teams ensure that systems and processes remain in compliance with the latest standards. A number of our plants hold approvals from the USFDA and the UK MHRA. APIs and Dosage forms are made in 19 sites across India, US, Hungary and Bangladesh.
ACQUISITIONS
Chattem Limited
They along with their subsidiaries, acquired 100% ownership of Chattem Chemicals, Inc.,a narcotic raw material importer and manufacturer of controlled substances with a facility in Tennessee.
Taro Pharma
They , along with their subsidiaries, recently signed definitive agreements to acquire Taro Pharmaceutical Industries Ltd., (TAROF, Pink Sheets), a multinational generic manufacturer with established subsidiaries, manufacturing and products across the U.S., Israel, Canada. North America represents more than 90% of Taro's sales.
This is a USD 454 million acquisition. Taro has a strong franchise in dermatology and topical products, in addition to product baskets in cardiovascular, neuropsychiatric and anti-inflammatory therapeutic categories. Taro US has more than 100 ANDA drug approvals in the U.S. alone. One NDA as well as 26 ANDAs are awaiting approval with the USFDA.
Able Labs
Dosage form manufacturing facilities spanning 2,50,000 sq ft with specifically designed areas to handle the manufacture of controlled substance dosage forms, were acquired for $23.15 million, from the US Bankruptcy Court of the District of New Jersey. This deal also includes the rights to product dossiers that were being marketed by Able, some of which we intend to bring to market after re-filing.
ICN, Hungary (2005) and a manufacturing plant in Bryan, Ohio
A plant in Hungary, ICN Hungary (previously known the world over as Alkaloida), one of the few sites globally that is authorized to make controlled substance APIs, was bought from Valeant Pharmaceuticals (NYSE:VRX). This 170 acre site with a 70-year manufacturing history, has facilities spread over 1,75,000 sq ft for the manufacture of APIs, as well as designated areas to make controlled substances. It also has facilities for dosage form manufacture and a large research center. Streamlining of operations, filing for the developed markets and addressing developed market customers is some of the steps that have been put into place as part of the turnaround.
Another facility in Ohio, US, for the manufacture of liquids, creams and ointments was also bought from Valeant, in order to file for interesting products in this area.
Niche brands purchased from Women's First Healthcare
Niche brands were bought from the San Diego, US, based Women's First Healthcare (WFHC, not listed) for less then $4 million. These brands are the gynaecological Ortho-Est® (estropipate), and the antimigraine preparation Midrin® (isometheptene, acetaminophen, dichloralphenazone). In 2001, WFHC had acquired the US rights for Ortho-Est®, Midrin® and one more product, for a total of $25.7 million plus royalty payments. We consider this brand acquisition to be a first step in the branded generic space in the US at a reasonable cost.
Phlox Pharma
Phlox Pharma, an API manufacturing pharma company, has a plant for Cephalosporins in Baroda District. This plant is approved for European markets for Cefuroxime axetil amorphous. Filings for additional Cephalosporin-based actives are planned. Substantial capacity addition has been completed and facilities meeting international regulatory requirements have been created for sterile and non-sterile Cephalosporin formulations. This site recently received USFDA approval.
Pradeep Drug Company Ltd
This WHO cGMP approved API manufacturing site for India and neighbouring markets was upgraded and has subsequently received ISO 9002 and 14001 certification.
Milmet Labs
Milmet's presence in ophthalmology with well-trusted brands like Viscomet (used in major eye surgeries) and Timolet (for glaucoma) made it an attractive acquisition candidate. New products were brought in, several of which used complex delivery technologies such as gel forming systems, the portfolio was revamped, and coverage improved for a move in rankings to a number 1 based on prescription share with this high-growth specialist group.
Brands from Natco Pharma
A basket of brands in the respiratory/chest therapy area as also brands in gastroenterology, orthopedics, anti-infectives and pediatrics were acquired. In line with the company's strategy of reorienting brands so that they can offer the best value, these brands were shifted into different divisions, doctor call-lists were reworked and new products added backed by strong promotional programs.
Caraco
Caraco Pharmaceutical Laboratories (CPD: Amex) is a Detroit, US based manufacturer of generic pharmaceuticals with a US FDA approved 70,000 sq ft plant. In 1997, Sun Pharma invested an initial $7.5million and structured a technology transfer agreement with the loss making, $0.8 million sales turnover Caraco, that would help it bring new products to market and build sales. A similar agreement was signed in 2002 on completion of the first agreement. Stakes were bought from two large shareholders in 2004, taking the holding to over 60% from 44%, and now the stake is 75% on a diluted basis, which has been reached by technology transfer.
Based on the technology transferred out of Sun Pharma, Caraco now markets 34 ANDAs (including 10 Sun Pharma ANDAs) and has witnessed an increase in sales to $117 million in the year ending March 2007. 77 more ANDAs await approval from both the companies with a well-considered pipeline of generics under development. The US generic opportunity is immense, with products worth over $40 bill likely to go off patent in the next few years. For some key products, Caraco sources API from Sun Pharma's plants and competes as an integrated manufacturer. Such integration offers considerable time and cost advantages in the competitive US generics market.
MJ Pharmaceuticals Ltd.
This plant, with one USFDA approval for Cephalexin capsules and UKMHRA approvals for oral dosage forms, was acquired for the tremendous potential that the site offered for international markets.
Other approvals include those from South African Medicines Control Council (MCC), Brazilian National Agency of Sanitary Surveillance (ANVISA) and Columbian Instituto Nacional de Vigilancia de Medicamentos y Alimentos (INVIMA).
This flagship plant is spread over 60,800 sq. mt, and has been upgraded to offer capability across dosage form lines (sterile dry powder injections, small volume injections, nasal sprays, tablets, capsules, soft gelatin caps, aerosols, ophthalmics). This plant has one of the best manufacturing sites for insulin in India, and has one of Asia's largest sites for injectables and nasal sprays. This site, with 7 manufacturing lines, spread over 36,000 sqft, was recently inspected and approved by the USFDA for injectables and nasal sprays.
Gujarat Lyka Organics Ltd.
This manufacturing site for Cephalexin and 7ADCA actives has since been converted into a ISO 9002 certified, intermediates and API manufacturing site for India and traditional markets.
Tamil Nadu Dadha Pharmaceuticals Ltd.
Enabled a quick entry into high-growth therapy areas of interest: fertility, anticancer, anesthesiology, gynaecology, pain management. Trusted brands, processes for difficult-to-make Oncology products such as Cisplatin and Carboplatin, and a field force with existing relationships were advantages. In the subsequent years, this portfolio was totally revamped to bring new products to market, doctor coverage was improved, and a swift increase in customer rankings was seen. We revamped the product list with new products based on complex technologies, like Susten and Lupride, to earn the trust of doctors in India and world markets
MERGER OF SUN PHARMA AND TARO
On May 28th, Taro sent Sun Pharma a notice for the purported termination of the merger agreement. Amongst the reasons it has stated, was the fact that US $10.25 per share, the price Sun Pharma would have offered after due board clearance, was too low in view of the dramatic turnaround at Taro. Sun Pharma has responded to the letter, stating that Taro is not entitled to terminate the merger as per the terms of the agreement. Sun Pharma remains skeptical of Taro's turnaround. In our opinion, if not for Sun Pharma's cash injections of approx. $60 million last year, Taro would have virtually negative cash - hardly the "dramatic" improvement of which Taro has boasted.
Sun Pharma has challenged this termination of merger in the Supreme Court of New York. While Sun Pharma has made every effort to fulfill its obligations under the Merger Agreement, Taro has failed to honor its side of the bargain and take all necessary action to consummate the merger. Further, Taro has ignored all attempts to discuss, and put forward to Taro's shareholders, an increase in the merger consideration in order to complete the transaction.On June 25, Sun Pharma exercised the Option under its Option Agreement to acquire all the shares held by the controlling shareholders of Taro Pharmaceuticals Industries Limited (Taro). In connection with the exercise of the Options, Sun Pharma has
also commenced a Tender Offer for all Ordinary Shares as required by the Option Agreement. The Option Agreement also requires that Sun Pharma specifically commence its Tender Offer at US $ 7.75 per share. Israeli firm Taro Pharmaceuticals Industries Ltd has filed a lawsuit against India's Sun Pharma alleging violations disclosure norms in the latter's tender offer.In its lawsuit filed in federal court in Manhattan, Taro alleged that Sun Pharmaceutical Industries Ltd., claiming the Indian drugmaker's tender offer for Taro failed to disclose key information.Sun Pharma didn't include some key information about Food and Drug Administration violations by Sun's U.S. generics affiliate Caraco Pharmaceutical Laboratories Inc. and the associated seizure of some of its products. Sun Pharma own majority stake in U.S. subsidiary Caraco Pharmaceutical Laboratories Ltd. Recently, US FDA seized $20 million in products, in a follow-up action for manufacturing defects including oversized tablets at Caraco's plants. US FDA's action could result in major impact of the events as harmful to Taro if Sun were to gain control of the company, Taro alleged. Also, Sun did not disclose securities suits filed by Caraco shareholders and misused Taro's confidential information, Taro said.
"Sun is seeking to coerce shareholders of Taro to sell their Taro stock to Sun for a grossly inadequate price by means of a tender offering statement that has been amended over 25 times," Taro said in its complaint. Sun illegally used confidential information to disrupt and harm Taro's customer relations and undermine Taro's revenue. Through the litigation Taro is seeking to block Sun's use of its tender offer materials as well as damages and an injunction. The latset U.S. District Court filing in New York is in addition to ongoing pending litigation involving Taro, Sun and others in Israel and New York state courts.
Recently, India's Sun Pharma has got cleared of US Anti Trust Act to acquire all outstanding ordinary shares of Taro Pharmaceutical Industries Ltd, the company announced in a press statement. The waiting period mandated in connection with the tender Offer by its Alkaloida Chemical Company Exclusive Group Ltd to acquire all outstanding ordinary shares of Taro Pharmaceutical Industries Ltd expired on September 11, 2009.
Sun Pharma's ongoing efforts to acquire controlling stake in Taro reached a flash point in June when the Mumbai-based company filed a law suit in New York against the Israeli firm and its board while maintaining that it exercised the option of acquiring all shares of Taro held by controlling shareholders. Following this, Sun Pharma it would commence a tender offer for all ordinary shares as required by the option agreement in the next few days. Sun reiterated the option agreement also required that it specifically commenced its tender offer at $7.75 per share within 30 days after termination of the merger agreement.
Sun Pharmaceutical currently holds around 36% stake in Taro.Sun Pharma launched the open offer to acquire additional shares of the Israeli drug company. Sun and Taro had signed the $454 million merger agreement in May 2007. However, Taro unilaterally terminated the merger agreement, after one year of signing the agreement. As a reason for terminating the agreement Taro said the price offered by Sun was not satisfactory. Later, Sun claimed in the event the merger was not consummated, Taro's controlling shareholders led by Taro's Chairman Barrie Levitt, granted Sun Pharma an option to acquire all their shares, including all of the founder's shares. In the meantime, Sun Pharma said it has filed an action in the Supreme Court of the State of New York against Taro and its full Board of Directors. Sun launched an open offer at a price of $7.75 per share in June last year through its subsidiary to acquire all shares of Taro, which was again legally challenged by the latter. The Supreme court has currently prohibited Sun Pharma from closing the offer until it gave a verdict on the issue.
The Offer is currently subject to a continuing order issued by the Supreme Court of Israel temporarily prohibiting the closing of the Offer until the Supreme Court issues a decision on the appeal of the litigation commenced against Alkaloida and its affiliates by Taro and certain of its directors regarding the applicability of the special tender offer (STO) rules under the Israeli Companies Law to the Offer.
The Tel-Aviv District Court had previously ruled in favor of Sun that a special tender offer was not required. The Offer is scheduled to expire on the fifth business day following the date Alkaloida announces a ruling on the appeal of the STO litigation or if, prior to such ruling, the temporary order is otherwise lifted. If the conditions to the Offer have not been satisfied waived by Alkaloida, Alkaloida reserves the right to further extend the Offer. The Offer was commenced on June 30, 2008 in order to comply with the terms of the Option Agreement between Alkaloida and the controlling shareholders of Taro. Alkaloida exercised its options to acquire shares of Taro from the controlling shareholders on June 25, 2008. The Option Agreement required Alkaloida, promptly after exercising the options, to commence a tender offer at USD 7.75 per Ordinary Share of Taro held by other shareholders. As of 5:00 p.m., New York City time, on September 11, 2009, 32,202 Ordinary Shares had been tendered and not withdrawn from the Offer, according to the release
Sun Pharma board to consider merger of Export subsidiary
Sun Pharmaceutical Industries Ltd, the speciality pharmaceutical company announced a board meeting , at its registered office in Vadodara. The company is seeking approval to merge Sun Pharma Exports Ltd, its subsidiary into the main company.This move will help in the rationalisation of export business and consolidation of income and net profit in the parent company. The increase in dividend tax from 10% to 20% (with 22%surcharge) also impacted the decision.Sun Pharma had recently reported 9-month sales of Rs. 328.16 cr. (9-month 98/99-Rs.243.27 cr.) and a PAT of Rs. 65.71 cr (9 months 98/99-Rs. 42.07 cr.). Sun Pharmaceutical Exports Ltd., had reported sales of Rs. 45.94 cr. and PAT of Rs 7.29 cr. for the 9-month period ending December 1999 (sales of Rs 31.88 cr. and PAT for 9-month period in 1998-99-
Rs. 6.32 cr.) The company is currently ranked 8th by domestic prescription products (5th on monthly rank).
The company is growing at 36%, which is significantly higher than the 9.2% reported for the pharma industry (ORG Retail Chemist Audit, February
2000).
