New Delhi: Competition Commission of India (CCI) is scrutinising whether the $4 billion Sun-Ranbaxy deal would result in high market concentration of certain molecules. “The major issues obviously are that in many of the molecules, the basic building block in the pharmaceutical industry, whether in some of those molecules there is high market concentration which will emerge as a result (of the consolidation). That is the matter,” said CCI chairman, Ashok Chawla at an event organised by Assocham.
CCI chief said that it is for the first time that CCI is going for the public scrutiny of a proposed M&A deal to ensure fair competition in the domestic pharma market. In April 2014, Sun Pharma and Ranbaxy had a deal that would create one of the top five largest speciality generics company in the world.
CCI has asked Sun Pharma and Ranbaxy to make public details of their proposed transaction in a “prescribed format” within 10 working days.
In case the CCI finds the deal in the current form could hurt fair competition in the domestic pharma market, it can even direct the companies to divest some assets as a pre-requisite for approval.
The deal was approved in July by leading stock exchanges BSE and NSE. Talking about controlling the prices of essential drugs, head of the fair trade regulator said, “Only if it is unfair and discriminatory do we come into the picture but the government has an instrument in terms of essential medicines’ list where they regulate prices and I think it will be done under that.”
Sun Pharmaceutical Industries would acquire Ranbaxy Laboratories in a USD 4-billion deal that includes USD 800 million debt. The transaction has valued Ranbaxy at 2.2 times its USD 1.8 billion revenue for 2013, or about Rs 457 per share. The deal was approved last month by leading stock exchanges BSE and NSE. PTI RAM
On the imposition of Rs 2,545 crore fine on 14 carmakers for not selling spare parts in open market, CCI said it wanted to ensure that spare parts maintenance market gets less expensive for consumers. “Our whole attempt was to ensure that the spare parts maintenance market gets more broad based and user friendly and less expensive for consumers,” Mr Chawla said.