Mumbai, India (4E) – Sun Pharmaceutical said it will buy Ranbaxy, a rival company that is controlled by Japan’s Daiichi Sankyo, in an all-stock transaction valued at $4bn.
The deal will create India’s biggest pharmaceutical firm and the world’s fifth-largest maker of generic drugs.
The move comes at a time when U.S. regulators are scrutinizing Ranbaxy by implementing import bans on some of the company’s drugs made at certain facilities. The deal still requires approvals from shareholders and regulators.
The Food and Drug Administration (FDA) banned Ranbaxy earlier this year from manufacturing and distributing drugs for the U.S. market from its Toansa facility in Punjab. The facility is the company’s fourth to be hit with a ban.
The facility had “significant” manufacturing violations, the U.S. drug regulator said.
Under the terms of the deal, Daiichi Sankyo agreed to indemnify Sun Pharma and Ranbaxy for certain costs and expenses related from the subpoena.
In a statement, Sun Pharma managing director Dilip Shanghvi said Ranbaxy has a significant presence in the U.S. and Indian pharmaceutical markets.