ET Exclusive | Sun Pharma set to acquire Organon for $12.5 bn, its biggest till date

Mumbai: India’s most valuable drug maker Sun Pharmaceutical Industries is set to make its biggest and most ambitious overseas acquisition till date, a near $12.5 billion acquisition of New Jersey-based Organon & Co., said people with knowledge of the development. This will also be the largest overseas purchase by an Indian company after Corus was taken over by Tata Steel in April 2007.

A formal announcement was made on Monday morning.

Sun will be paying $4.5 billion for Organon’s equity, a 53% premium on the equity based on Friday’s close. The company has $8.5 billion of debt which Sun will inherit.


The board of Organon met in the US over the weekend to shortlist Dilip Shanghvi-led Sun as the preferred bidder over a rival consortium--a combination of Swedish buyout group EQT and German pharma company Grünenthal, a specialist in pain management, said the people cited.

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ET had reported on April 24 that Sun had submitted a binding offer to buy the company with committed financing support from MUFG, JP Morgan and Citi to the tune of $12 billion. JP Morgan is also advisor to Sun. AZB and Linklaters are the legal advisors.

Organon will add significant heft to Sun’s women’s health portfolio and the fast-expanding biosimilars space.

Sun had also appointed consulting firm McKinsey & Co. to prepare a detailed integration and strategy report. That was presented to Sun’s board last weekend for detailed deliberation. The Mumbai-based company, known for turnarounds, is a good match for Organon, according to most analysts. It has a proven track record of buying companies and wringing out efficiencies in firms that face financial management issues such as Caraco, Taro and Ranbaxy, its biggest transaction thus far.

An executive said executive chairman Dilip Shanghvi’s son Aalok is expected to move to the US once the transaction is completed. He has been spearheading the transaction along with Sanjay Jerry, a confidante of Shanghvi senior. While Sun has established itself in the dermatology, onco-dermatology, and ophthalmology businesses, an Organon buyout will help it expand into areas of high margins and lower competition, said experts tracking the US pharmaceutical industry.

Sun's ambitions for a strong presence in innovative research medicines in the US was realized with its plaque psoriasis drug Ilumya (tildrakizumab), which grossed sales of $681 million last year. The company's most recent launches--Leqselvi (deuruxolitinib), used for a specific hair-loss treatment, and Unloxcyt (cosibelimab-ipdl), a new-generation anti-cancer drug--have also shown strong momentum. Sun has built an array of a dozen innovative brands in the US.

Organon’s stock price has zoomed over 81.29% in the past month as the buyout buzz got louder. On Friday, it shot up 4.84% to $11.26 for a market capitalisation of $2.93 billion, following ET’s report about binding bid submissions. Sun Pharma on the other hand fell 3.57% to Rs 1,619.95 on Friday for a market value of Rs 3.89 lakh crore ($41.3 billion). The stock frenzy has shifted attention away from Organon’s leveraged balance sheet and muted growth expectations toward what a buyer might see in its portfolio, cash generation, and carve-out value.

On Friday, Sun incorporated a new US arm, Sun Pharma America Inc. It is expected that this will be the vehicle for the acquisition.

Sun Pharma and Organon didn’t respond to queries.

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The global biosimilar market is currently dominated by Switzerland's Sandoz, US companies Pfizer, Biogen and Amgen, South Korea's Celltrion and Samsung Bioepis, and India's Biocon that account for about 70% of sales.

In recent months, Sun Pharma chairman Shanghvi has stressed the need for the Indian drug makers to pivot to innovative research for the next phase of growth while keeping intact their lead in the generics business and, if necessary, consider acquisitions to build scale.

“We have indicated in the past that we need to be confident that whatever acquisition we make, we should be able to manage effectively without diluting focus on our own growth,” Shanghvi said on an earnings call in January. “At the same point of time, I think we have also indicated that for acquisition, if it is necessary, we are comfortable in raising debt.”

Sun is raising debt principally to refinance the debt on Organon’s balance sheet, accumulated after it was spun off from MSD. Organon ended 2025 with $8.64 billion in debt and guided for 2026 revenue of $6.1 billion to $6.3 billion, versus $6.43 billion reported for 2025. Sun had $3.2 billion (Rs 26,000 crore) of net cash surplus at the end of December on its balance sheet that it plans to use to buy Organon’s equity.

The Indian company’s “liquidity position is strong, supported by healthy cash flow generation and a net cash surplus,” said an ICRA credit report in March. “Liquidity is also supported by substantial unutilised fund-based bank facilities. On the other hand, SPIL (Sun Pharmaceutical Industries Ltd) has limited obligations in terms of expected capex of around $150-200 million per annum and no debt repayment obligations in the near-to-medium term. Its capex can be adequately funded through existing liquidity/internal accruals.”

ET was the first to report January 19 that Sun was eyeing Organon for a buyout. On April 10, ET said Sun was readying a final offer this month. That sparked a 28-29% rally during the trading session that followed.

Organon has been working with Morgan Stanley since late last year to find a buyer for the company. Samsung Bioepis, Organon's partner for manufacturing biosimilars, was reported to be a bidder toward the end of 2025 but the South Korean company later denied any such plans. Sun has been on the prowl for Organon ever since it decided to sell the JADA post-partum haemorrhage (PPH) treatment system to Laborie Medical for up to $465 million as it sought to pivot from female health devices to renew its focus on the women’s biosimilars, said people in the know.