Sun Pharmaceutical Industries Ltd, a leading Indian pharmaceutical company, is in the preliminary stages of evaluating a potential acquisition of Organon & Co (NYSE: OGN), a U.S. public company focused on women's health biopharmaceuticals. Sources familiar with the matter indicate that the proposed deal could be a landmark transaction for the Indian pharmaceutical sector, potentially the largest cross-border acquisition ever undertaken by an Indian drugmaker.
According to reports, Sun Pharma has submitted a non-binding all-cash offer for Organon and secured acquisition financing totaling between $10 billion and $14 billion. This sizeable financing arrangement underscores the company's commitment to pursuing the transaction if negotiations progress to a definitive stage.
If completed, the acquisition would represent Sun Pharma's largest buyout to date. It would mark a significant intensification of the company's international expansion efforts, particularly in the women's health biopharmaceutical and biosimilars segments, and enhance its strategic presence in the U.S. pharmaceutical market. One source described the prospective deal as "transformative," suggesting it would materially strengthen Sun Pharma's position within the U.S.
Furthermore, sources report that Sun Pharma has retained a European banking institution to advise on structuring a detailed financial proposal to present to Organon's board of directors. Negotiations remain at an early stage, and there is no guarantee the discussions will culminate in a binding agreement. The complexity of the deal and the sizable debt component contribute to ongoing deliberations.
Organon was spun off from Merck & Co. (NYSE: MRK) in 2021, inheriting approximately $9.5 billion in debt. Since its separation, Organon has focused on both organic and inorganic growth strategies alongside efforts to streamline its balance sheet, which have included divestments of non-core assets.
Among its notable recent transactions, Organon acquired Dermavant from Roivant Sciences (NASDAQ: ROIV) for $1.2 billion in September 2024. Conversely, it disposed of its JADA post-partum hemorrhage system to Laborie Medical for $465 million as part of rationalizing its asset base.
As of the conclusion of the second quarter of fiscal year 2025, Organon's debt stood at approximately $8.9 billion. Reports suggest that earlier discussions between Sun Pharma and Organon were paused due to valuation differences. However, Sun Pharma re-engaged in talks after Organon's share price decreased by nearly 50%, sparking renewed interest. It remains unclear whether Sun Pharma will propose an entirely cash-based offer or a combination of cash and stock in any forthcoming bid.
Additional sources have emphasized the uncertainty surrounding the outcome of negotiations, noting that discussions may not ultimately lead to a definitive offer. There is also the possibility of competing bids emerging, which could affect the deal's feasibility and structure. Should the acquisition be realized, the combined entity's pro forma leverage is expected to be in the vicinity of 2.5 times net debt relative to EBITDA, reflecting a significant indebtedness profile.
Organon's recent financial performance provides further context for the potential acquisition. In the third quarter, the company reported adjusted earnings per share of $1.01, surpassing analyst estimates of $0.94. Revenues increased by 1% to $1.60 billion, slightly exceeding consensus forecasts of $1.58 billion. Despite this positive quarterly performance, Organon revised downward its full fiscal 2025 sales guidance from an initial range of $6.275 billion–$6.375 billion to a narrower band of $6.20 billion–$6.25 billion, falling just short of the consensus estimate of $6.289 billion.
Organon's leading biopharma product is Nexplanon, a contraceptive implant. Notably, on the Friday prior to publication, the U.S. Food and Drug Administration (FDA) approved a supplemental New Drug Application (NDA) for Nexplanon. This approval extended the approved usage duration from three years to five years, representing a substantial enhancement of the product's market appeal and clinical utility. The FDA also instituted a new Risk Evaluation and Mitigation Strategy (REMS) program within the United States aimed at mitigating complications related to improper insertion and removal of the implant.
At the time of reporting, Organon's shares were trading up 4.68% at $9.17, reflecting positive market reception to recent developments. Market data further detail comparisons with Merck & Co. (MRK) and Roivant Sciences Ltd. (ROIV), highlighting the competitive landscape within the pharmaceutical industry.