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Drug firm merger set for India

JIJI

Major drugmaker Daiichi Sankyo Co. said Monday that India’s Sun Pharmaceutical Industries Ltd., a producer of generic drugs, will absorb its subsidiary in India.

The merger will create the fifth-largest maker of generic drugs in the world and the biggest drugmaker in India. Shareholders of the Daiichi Sankyo unit, Ranbaxy Laboratories Ltd., will receive 0.8 share of Sun Pharmaceutical for each Ranbaxy share in the deal, which is expected to be completed by the end of the year.

Daiichi Sankyo, meanwhile, which now owns about 63.4 percent of Ranbaxy, will acquire a stake of about 9 percent in Sun Pharmaceutical, which will boast sales of some ¥380 billion after the merger.

Because the U.S. Food and Drug Administration has banned Ranbaxy exports to the United States over a production problem at an Indian plant, Ranbaxy and Daichi Sankyo have been working together on a solution.

The merger will be the best way to fundamentally solve it, an official from Daiichi Sankyo’s corporate communications department said.

The company is examining the impact of the merger on its earnings for the year to March 2015, the official added.

The merged entity will take over operations Ranbaxy has promoted in emerging markets with Daiichi Sankyo, but the Japanese company may have to review its medium-term business plan for the five years from fiscal 2013 because one of the pillars is based on collaboration with Ranbaxy.