The funding for the deal is expected to come from a mix of debt secured by global banks and Sun Pharma’s own cash reserves. Sources indicated that the company’s previous successes in acquiring and revitalizing companies like Ranbaxy and Taro have bolstered its confidence in handling a transaction of this magnitude.
The effective integration of Taro’s US operations is also viewed as a positive sign for cultural and operational synergy.
Organon, an independent global healthcare entity, concentrates on enhancing women’s health and possesses a diverse portfolio that includes areas such as women’s health, biosimilars, and established brands. Its offerings encompass treatments for fertility, contraception, osteoporosis, and menopause, along with participation in the biosimilars market.
CNBC-TV18 has reached out to Sun Pharma for a statement, but a reply was still pending at the time of publication.
Also read: Dr Reddys gains may be short-lived; Cipla, Sun Pharma face risks: Vishal Manchanda
Brokerages highlight the strategic significance of the potential deal
Nomura has retained a ‘buy’ rating on Sun Pharma, setting a target price of ₹1,960 for December 2026, pointing out that the acquisition could bolster the company’s foothold in women’s health and respiratory sectors while facilitating entry into biosimilars.
The brokerage noted that Organon’s commercially-oriented business could mesh well with Sun Pharma’s global presence, and the transaction is expected to maintain the company’s specialty focus. Nomura also anticipates the deal to be earnings-enhancing and financially manageable, owing to Sun Pharma’s robust balance sheet.
Macquarie has reaffirmed an ‘outperform’ rating on the stock with a ₹2,150 per share target price, emphasizing that the acquisition would introduce a complementary portfolio, strengthen market presence, and diversify offerings by entering the biosimilars sector.
The brokerage estimates that the combined organization could experience significant earnings growth from the first year, with leverage remaining manageable at approximately 2.5 times net debt to EBITDA.
It is also expected that the company will return to a net cash status within three to four years, backed by substantial cash flows. According to Macquarie, the deal could enhance Sun Pharma’s commercial influence in key markets, including the US, Europe, China, and Japan, while allowing for the expansion of Organon’s women’s health portfolio in markets such as India.
Shares of the company closed 3.67% lower on Friday, at ₹1,618.50. The stock has fallen by nearly 10% over the past month.
