




Why Sun Pharma’s massive Organon buyout is winning over investors where Lupin, Biocon failed
Subscribe to enjoy similar stories.Sun Pharmaceutical Industries Ltd’s acquisition of Organon might yet avoid the pitfalls that its rivals, Lupin Ltd and Biocon Ltd, have faced in the past. Billed as among the largest deals in the Indian pharma space, the Sun-Organon deal is in a better place than the Lupin-Gavis and the Biocon-Viatris deals.When Lupin completed the acquisition of US-based Gavis Pharmaceuticals in March 2016, the former’s stock went downhill.
It took Lupin 8 years, 4 months, and 17 days to return to the level from which it started falling. Biocon took a similar beating when it acquired Viatris’ Global Biosimilars Business in 2022.
It took Biocon 1 year, 35 days to come back to the level from which it started falling.“On valuation, 6.2x Ebitda for Organon is meaningfully cheaper than the high-teens Ebitda Lupin paid for Gavis or what Biocon paid for Viatris around 3.3x sales for a loss-making asset,” said Nitant Darekar, research analyst at Bonanza. The all-cash merger values Organon at $14 per share, a 24% premium to its last closing price.In the case of Sun Pharmaceuticals, a similar prolonged sell-off in the stock is unlikely to be seen, analysts said.Experts add that the valuations Sun Pharmaceuticals paid for Organon is cheaper than both the Lupin-Gavis acquisition and the Biocon-Viatris acquisition.Sun Pharmaceuticals is acquiring Organon at roughly a 5–6x Ebitda, which is cheap compared to global specialty pharma valuations of 10–12x.
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