Sun Pharma to acquire Organon in US$11bn deal

Indian pharmaceutical giant Sun Pharma has agreed to buy Organon for US$11.75bn in a deal aimed at expanding its women’s health and biosimilars business.

Organon, which was spun out of Merck in 2021, has built a portfolio of more than 70 women’s health and general medicines products, including biosimilars, sold in the US and about 140 other countries.

The acquisition would give Sun Pharma a broader presence in biosimilars, which are medicines designed to be highly similar to existing biological drugs, and strengthen its position in women’s health.

Dilip Shanghvi, executive chairman of Sun Pharma, said: “Organon’s portfolio, capabilities, and global reach are highly complementary to our own, and we believe that bringing the two organizations together can create a stronger and more diversified platform.”

The companies said the combined business would generate annual revenue of US$12.4bn, operate across 150 countries and rank among the top three companies globally in women’s health.

They also said it would become the seventh largest biosimilar player.

Sun Pharma said the deal would help grow its innovative medicines business and expand its biosimilars offering.

It added that the combined company would have 18 large markets each generating more than US$100m in revenue.

Organon’s largest markets include the US, Brazil, Canada, China and countries in the European Union. The company also has six manufacturing facilities across the EU and emerging markets.

The deal follows market speculation that began on 10 April, when Indian media reported that Sun Pharma had submitted an all-cash offer for Organon.

A later report said the offer had been revised to US$13bn. Sun Pharma shares rose about 7 per cent on India’s National Stock Exchange after the announcement.

Sun Pharma said it would acquire all of Organon’s issued and outstanding shares in cash, using a combination of available cash and committed bank financing. It also estimated synergies of about US$350m within two to four years of completion.

The company said the acquisition would strengthen its cash generation, with EBITDA and cash flow set to nearly double, supporting efforts to reduce the net debt to EBITDA ratio of 2.3 times resulting from the deal. EBITDA is a measure of operating performance before certain costs are deducted.

Organon reported revenue of US$6.2bn last year and adjusted EBITDA of US$1.9bn. It also reported debt of US$8.64bn, down from US$9.5bn when it separated from Merck, and a cash balance of US$574m.

In November, Organon announced plans to sell its JADA System, designed to control and treat abnormal postpartum uterine bleeding or haemorrhage, to Laborie Medical Technologies for up to US$465m. Net proceeds from the sale will contribute to Organon’s cash balance as of 31 March 2026.

Organon will merge with a subsidiary of Sun Pharma, with Organon surviving the merger. The boards of both companies have approved the transaction.

Carrie Cox, executive chair of Organon, said: “Following a comprehensive review of strategic alternatives, our Board determined that this all-cash transaction offers compelling and immediate value to Organon stockholders.”

The transaction is expected to close in early 2027, subject to regulatory approvals and Organon stockholder approval.