India-based Sun Pharmaceutical Industries Ltd is reportedly evaluating a potential acquisition of Organon & Co (NYSE:OGN), a U.S.-based women's healthcare company.
If it goes through, the deal that could become the largest cross-border transaction ever by an Indian drugmaker, according to people familiar with the matter, as cited by The Economic Times.
Sun Pharmaceutical has submitted a non-binding all-cash bid and arranged $10–14 billion in acquisition financing.
Why It Matters
If completed, the transaction—valued at about $10 billion including debt—would be Sun Pharma's largest acquisition to date and its most ambitious overseas expansion since the Ranbaxy deal, significantly strengthening its presence in women's health biopharma and biosimilars.
One source described the possible deal as "transformative," saying it would significantly bolster Sun Pharma's presence in the U.S. market, highlighted News18.
People cited by ET said Sun Pharma has engaged a European bank as an adviser, which is preparing a financial proposal for Organon's board. Talks are still at a preliminary stage, and there is no certainty that negotiations will result in a transaction.
Organon was spun off from Merck & Co. (NYSE:MRK) in 2021 with roughly $9.5 billion in inherited debt. Since then, the company has pursued inorganic growth while attempting to streamline its balance sheet through asset sales.
Another media report added that Sun Pharma has engaged a European bank as an advisor to structure a comprehensive financial proposal.
In September 2024, Organon acquired Dermavant from Roivant Sciences (NASDAQ:ROIV) for $1.2 billion. More recently, it sold its JADA post-partum hemorrhage system to Laborie Medical for $465 million as part of its divestment of non-core assets.
As of the end of the second quarter of fiscal 2025, Organon's debt stood at $8.9 billion.
ET reported that Sun Pharma re-engaged in talks after Organon's share price roughly halved, having earlier paused discussions due to valuation concerns. It remains unclear whether Sun Pharma would pursue an all-cash offer or a mix of cash and stock.
People familiar with the matter highlighted that negotiations may not lead to a deal and that a bidding war is also possible. If completed, the combined entity would have pro forma leverage of about 2.5 times net debt to EBITDA.
Organon's Q3 Performance
Organon reported third-quarter adjusted earnings of $1.01 per share, beating the consensus of 94 cents. Sales were up 1% to $1.60 billion, beating the consensus of $1.58 billion.
Organon lowered its fiscal 2025 sales guidance from $6.275 billion-$6.375 billion to $6.20 billion-$6.25 billion, below the consensus of $6.289 billion.
Nexplanon, a contraceptive, is the company's top-selling biopharma product.
Organon's Nexplanon NDA
On Friday, the U.S. Food and Drug Administration (FDA) approved a supplemental New Drug Application for Nexplanon (etonogestrel implant).
The approval extends the duration of use of Nexplanon for up to five years, an extension of the previous three-year indication.
In addition, this approval includes a new Risk Evaluation and Mitigation Strategy (REMS) program in the U.S. to mitigate complications due to improper insertion and removal.
OGN Price Action: Organon shares were up 4.68% at $9.17 at the time of publication on Tuesday, according to Benzinga Pro data.
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