I have all the respect in the world for Sun Pharma and all that Mr Shangvi has achieved. However, simplistically, there are really 2 large issues on the table for Sun:
- the Ranbaxy merger and
- the Halol facility
As regards the former, of course there are challenges in making many of the Ranbaxy facilities USFDA compliant, but if anyone can do it, it is Shangvi – he has after all done 19 acquisitions for Sun thus far (India and outside India combined). It is also true that largely the acquisition has been reported to be quite synergistic by independent analysts.
The Halol facility is what is worrying analysts the most. For 2 reasons: firstly, its been a while since the issue was raised, and yet this has been hanging fire – not resolved satisfactorily by the company (if any industry expert has details as to exactly what are the issues that have been raised and what is the reported status on that, that would be wonderful). Secondly, I think the larger issue is the Indian pharma vs. USFDA per se.. And what I mean by this is: if big companies like Sun and Dr. Reddy – with all the expensive resources at their disposal (and with such high stakes), are facing such issues (some reported to be as basic as data availability and documentation), how easy are the resolution to such issues anyway? Ergo, is it possible that Indian pharma is so bad that they have been either been conjuring up data or not having any reliable data at all? Alternatively, is there any truth to the conspiracy theories that USFDA is gunning after Indian pharma (for reasons that need not be documented)?
Clarity on the above 2 items is quite essential before plunging onto Sun as an investment idea.
Best.
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