Ranbaxy has been facing serious issue in the US which has affected its growth

Ranbaxy has been facing serious issue in the us which

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and the US. Ranbaxy has been facing serious issue in the US which has affected its growth there. As a result the deal is complementary for both and derisks the business model for Sun Pharma, in particular with a better global spread of business. As a result the deal is complementary for both and derisks the business model for Sun Pharma, in particular with a better global spread of business.
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Source: Evaluate Pharma, Company filings Sun Pharma is already world’s fifth largest generic drugmaker. However, Hospira, Sanofi and Aspen are close behind it. The deal would bring together world’s fifth- and ninth- largest generic pharma companies, making Sun Pharma a stronger player at the fifth slot behind Teva, Sandoz, Actavis and Mylan .
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Source; AWACS through 2014 Sun-Ranbaxy will have a combined market share of 9.2 per cent. In a highly fragmented industry this would still mark a significant margin from the number two player Abbott, which will have 6.5 per cent share. The new entity will be much bigger than other home-grown players like Cipla, Cadila, Lupin and Mankind Pharma among others.
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Financial Performance After the merger of Ranbaxy, Sun Pharma has become the world’s largest pharmaceutical company and has a portfolio of more than 2000 products with 50 manufacturing sites across the world. The table above compares the acquisition before and after with Ranbaxy. Sun Pharma pre acquisition reported a net sales of Rs 1, 60,044 in FY 2014, while post acquisition, the net sales has increased to Rs 2, 72,865 in FY 2015 which shows a synergy benefit after a successful acquisition. Gross profit also increased by Rs 73,223 similarly, Net Profit has gone up to RS 45,394. It can also be seen that Earnings before interest, taxes, depreciation, and amortization (EBITDA) in FY 2014 was Rs 71,141 and post-acquisition, it increased to Rs 78,166. However, the adjusted net profit declined by Rs 8818. The balance sheet of the company shows strengthened position after the acquisition at every parameter.
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According to the financial ratios last five years, it can be concluded that Sun Pharma has benefited to have acquired Ranbaxy as both its sales and profits increased. At the same time the company is facing margin pressure after mega merger, the same can be observed in gross profit margin, EBITDA Margin%, Net Margin. Return to contributories has also declined significantly after merger which can be noticed through ROCE, ROE. The company has a record of having debt-free balance sheet but after acquisition the Debt/Equity has also increased which might be hard pill for Sun Pharma to swallow.
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Source : Sun Pharma Financials
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  • Spring '18
  • Raju Birion
  • Generic drug, Sun Pharma, Ranbaxy Laboratories, Sun Pharmaceutical Industries Ltd

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