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Sun Pharma, not sated by Ranbaxy deal, may spend up to $7 billion on M&A: Bankers

Sun Pharmaceuticals Industries Ltd , emboldened by its takeover of domestic rival Ranbaxy Laboratories, is willing to spend as much as $7 billion on further acquisitions, bankers familiar with the generic drugmaker`s strategy said.

The just completed Ranbaxy deal, its biggest to date at $3.2 billion, has given India`s biggest drugmaker sufficient scale in generics and emerging markets to think about its next step – beefing up expertise in higher margin products and gaining a bigger global presence.

On Sun Pharma`s radar are U.S. and European companies that develop biosimilars – cheaper copies of biotech drugs which have become some of world`s hottest selling medicines, investment bankers say.

“What has changed after the Ranbaxy acquisition is that their ambition has grown and now they want to become a global company which is more innovation-oriented,” said a banker at a foreign bank with knowledge of Sun Pharma`s plans.

Dilip Shanghvi, who with his family controls Sun Pharma and is India`s second richest man according to Forbes magazine, feels the need for a “transformational acquisition”, but will be patient about finding the right candidate, he added.

Sun Pharma, which has a market value of nearly $36 billion, is also interested in non-biotech complex generic medicines that offer better margins than the simpler copycat drugs Indian drugmakers usually specialise in.

It is willing to look at either whole companies or acquire complex generics on their own, the bankers said, declining to be identified as they were not authorised to speak to the media on the matter.

In one potential near-term opportunity, they said Sun Pharma may emerge as a bidder for some drugs Teva Pharmaceutical Industries , the world`s biggest generic drugmaker, will likely be required to divest if it is successful in its unsolicited $40 billion bid for rival Mylan .

A Sun Pharma spokesman declined to comment for this article. Shanghvi said last month the Ranbaxy deal did not preclude Sun Pharma from further M&A, especially if the target company has capable management.

But he also said Sun Pharma will focus for the time being on resolving quality problems at Ranbaxy factories.

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