Indian merger creates fifth-largest generic drugmaker

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In a merger of two India-based companies that creates the world's fifth-largest generic drugmaker, Sun Pharmaceuticals has agreed to buy Ranbaxy Labs from Daiichi Sankyo for $3.2 billion.

While the deal gives Sun access to major generics with tentative approval in the US and Ranbaxy's facilities in emerging markets, it also inherits a slew of manufacturing concerns that have kept Ranbaxy drugs from the US and European markets.

Sun gains generics of Novastis' blockbuster Diovan, AstraZeneca's Nexium and Roche's Valcyte.It also receives 180-day marketing exclusivity for allthree, should they win final approval by FDA, Bloomberg reports.

Sun has announced detailed turnaround plans for Ranbaxy that include righting its regulatory issues with the FDA, yet the company has endured FDA scrutiny of its own over manufacturing practices. Bloomberg reported recently that the FDA discovered that a facility run by Sun has been deleting quality control tests for some ingredients and products that go to the US.Additionally, a Karkhadi plant was banned from shipping products to the US last month.

Daiichi, which will end up with a 9%stake in Sun, paid 61% more than the current price tag when it bought Ranbaxy five years ago.

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