Sun Pharma looks to rise in US with $10 billion Organon buy

Sun Pharmaceutical Industries Ltd, India’s largest drugmaker by market cap and revenue, is evaluating the acquisition of US-based Organon, a specialist in women’s health with an expanding presence in the fast-emerging biosimilars space, people familiar with the development told ET. This comes nearly a decade after Sun acquired Ranbaxy.

The transaction, likely to come with a $10 billion price tag inclusive of debt, will arguably be the most audacious takeover bid by Sun’s billionaire founder Dilip Shanghvi, 70, known for his astute deal making. A successful transaction will also make it the largest cross-border acquisition in the Indian pharmaceutical space and give Sun significant heft in the US. One of the persons cited said a deal would be “transformative” for Sun.

Sun’s advisors include a European bank, which is putting together a comprehensive financial package to be presented to the board of Organon, a company that was spun out by MSD (Merck Sharp & Dohme) in 2021, inheriting $9.5 billion of debt.

Since then, it has grown inorganically, including the $1.2 billion acquisition of Roivant’s immuno-dermatology subsidiary Dermavant in September 2024, further leveraging its balance sheet. Organon had debt of $8.9 billion at the end of the second quarter in 2025 and it’s been trying to divest businesses to cut the flab.

The company’s market cap was at $2.28 billion on the NYSE, with the stock ending at $8.76 on Friday, down from a peak of $17-18 in November 2024. It shot up 28.1% in the past month, anticipating a successful outcome for sale talks after nosediving 20.9% on October 27, after reports of sales malpractices became public. Then CEO Kevin Ali stepped down soon after. Joseph Morrissey, executive vice president and head of manufacturing and supply, was made interim CEO, while Organon began looking for a permanent leader.

Since then, it has grown inorganically, including $1.2-billion acquisition of Roivant’s immuno-dermatology subsidiary Dermavant in September 2024, further leveraging its balance sheet. Organon had debt of $8.9 billion at the end of the second quarter in 2025 and it’s been trying to divest businesses to cut the flab.The company’s market cap was at $2.28 billion on the NYSE, with the stock ending at $8.76 on Friday, down from a peak of $17-18 in November 2024. It shot up 28.1% in the past month, anticipating a successful outcome for sale talks after nosediving 20.9% on October 27, after reports of sales malpractices became public. Then CEO Kevin Ali stepped down soon after. Joseph Morrissey, executive vice president and head of manufacturing and supply, was made interim CEO, while Organon began looking for a permanent leader.

For the third quarter of 2025, Organon’s total revenue was $1.60 billion, up 1% on an as-reported basis. Its full-year revenue generation guidance was lowered marginally to $6.20 billion while adjusted ebitda margin guidance fell to ~31.0%. The company posted $6.4 billion revenue in FY24 and ebitda of $1.95 billion.

Sun, with a current market cap of $45 billion, posted FY25 revenue of Rs 52,041 crore ($6.19 billion) and ebitda of Rs 15,300 crore ($1.82 billion), up 17.3%. It’s been engaged with Organon ever since the US company stepped up its divestment programme, said the people cited. Last November, Organon 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 women’s health devices to renew its focus on the women’s health biopharma range. Nexplanon is the company’s top-selling biopharma product, achieving around $179 million in revenue in the second quarter of FY25.

Talks didn’t make headway previously because of high valuations but Sun has reengaged with Organon’s share price halving. It is however not clear if Sun will be making an all-cash offer or a combination of stock and cash.

There is still no guarantee on negotiations yielding a result, said the people cited. Many also expect a bidding war.

Sun Pharma said it wouldn’t comment on speculation. Organon didn’t respond to queries.

Experts said Sun Pharma, known for turnarounds, is a good match for Organon. It has a proven track record of buying companies and bringing about efficiencies in firms that face financial management issues such as Taro and Ranbaxy. One executive said Shanghvi’s son Aalok may move to the US if the transaction goes through.

“The combined pro forma leverage will be 2.5x net debt to ebitda,” said one of the persons cited, adding this would be adjusted against Sun’s cash reserves of about Rs 20,000 crore. Sun’s total debt stands at a negligible Rs 2,362 crore, according to its FY25 annual report.

Big on biosimilars

The global biosimilar market is currently an oligopoly in which the top eight corporations — including Switzerland’s Sandoz, US companies Pfizer, Biogen and Amgen, South Korea’s Celltrion and Samsung Bioepis, and India’s Biocon — account for about 70% of sales.

Late last year Samsung Bioepis, Organon’s partner for manufacturing biosimilars, was reported to be a bidder but the South Korean company later denied any such plans.

Sun has an established portfolio of about 12 branded products and a mature commercial footprint to promote those in the US, having reached a stage where it’s looking to push additional products. Sun Pharma’s own innovative drugs pipeline boasts of at least six in advanced stages of clinical development including a weight-loss drug in early testing.

While Sun Pharma has established itself in the dermatology, onco-dermatology, and ophthalmology businesses, an Organon buyout will help it expand into areas of high margins and less competition, said experts tracking the US pharmaceutical business.

In FY25, Sun Pharma’s innovative products portfolio in the US grew to $1.21 billion, fuelled by its flagship plaque psoriasis brand Ilumya.