Corrected: BREAKINGVIEWS-Indian pharma’s US bet hinges on easy turnaround

Organon & Co.

28/04/2026 02:57

Corrects fifth paragraph to show that Sun Pharma’s return on its acquisition is 12.9%, not nearly 18% as previously stated. The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Shritama Bose

MUMBAI, April 27 (Reuters Breakingviews) - A quest for new markets is charging up outbound M&A in India. In what could be one of the country's largest ever cross-border acquisitions, Sun Pharmaceutical Industries SUN.NS, its top drugmaker by revenue, on Monday said it will buy U.S.-based Organon OGN.N for nearly $12 billion, including debt. The deal gives the buyer access to other parts of Asia and deepens its European presence as well as Organon's position in women's health. Investors may quibble about the cash burn but it’s a price worth paying.

Sun Pharma offered $14 for each Organon share in the all-cash transaction, representing a 24% premium to the target’s closing price on Friday. For its $12 billion, the Indian group gets a commanding position in women's health, including menopause treatments where Organon is a global leader, alongside a portfolio of hard-to-replicate biosimilars. The acquisition also hands Sun a foothold in China and South Korea, two markets it has long coveted, and a direct-to-consumer sales platform in Europe that could reshape how it reaches patients across the continent.

The tricky part is boosting growth at the New Jersey-based target, which logged a 3% fall in its revenue last year. Sun Pharma could boost an already fast-growing market for contraceptives and fertility products and still-developing therapies for unmet needs, such as menopause-linked complications. Revamping Organon will require its new owner to leverage its global partnerships for marketing and spruce up supply chains.

But this all comes at a price. To capture that long-term opportunity, Sun is splashing its cash, a rare move for an Indian company. After the acquisition the Indian drugmaker’s net debt will be equivalent to 2.3 times its EBITDA.

The gamble may well pay off. Organon is expected to earn around $1.8 billion of operating profit in 2028, per LSEG forecasts. Sun Pharma expects the merger will eventually generate $350 million in synergies. Assuming Organon's tax rate stays at 29.5%, Sun Pharma can reap a 12.9% return on investment by 2028, well above the U.S. pharmaceutical industry’s weighted average cost of capital of 7.85%, according to data from NYU Stern School of Business.

To be sure, analysts are concerned about the target's thinning pipeline of exclusive products and increased pricing pressure. The cure, ultimately, will hinge on Sun Pharma's ability to revive a business with more potential than its recent results suggest.

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CONTEXT NEWS

Sun Pharmaceutical Industries will buy all the outstanding shares in U.S.-based drugmaker Organon in an all-cash transaction valuing the target's enterprise, including debt, at $11.75 billion, the companies said in a joint statement on April 27. The Indian acquirer will pay $14 a share, a 24% premium to Organon's closing price on April 24.

Shares in Sun Pharma were trading nearly 7% higher at 0626 GMT on April 27.

Buying Organon will add biosimilars to Sun's portfolio https://www.reuters.com/graphics/BRV-BRV/myvmyqeyjvr/chart.png

(Editing by Aimee Donnellan; Production by Ujjaini Dutta and Shrabani Chakraborty)

((For previous columns by the author, Reuters customers can click on BOSE/shritama.bose@thomsonreuters.com))