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Indian drug giant eyes Swedish pharma firm

Indian group Sun Pharmaceutical Industries is in talks to buy leading Swedish drugmaker Meda AB in what could result in a $5 billion takeover, the Wall Street Journal reported on Friday.

Published: 31 May 2013 15:44 CEST

Indian drug giant eyes Swedish pharma firm

The US newspaper, citing anonymous sources, said Mumbai-based generic drug manufacturer Sun Pharma was in talks with banks to finance the deal. Sun Pharma, India’s biggest pharmaceutical group by market capitalization, with annual sales of more than $2 billion, is run and controlled by founder Dilip Shanghvi.

Meda, also a maker of branded generic prescription and over-the-counter drugs, is based in Stockholm and is listed on the Swedish stock exchange.

“Meda has a market value of roughly 25 billion kronor in Stockholm, meaning that with a typical takeover premium of 25 percent to 30 percent, it could be worth between $4.5 billion and $5 billion,” the Wall Street Journal said.

Analysts say Meda, one of Sweden’s largest pharmaceutical firms, is a desirable addition for any drugs company seeking to increase its pipeline of medicines in development.

Shares of Sun Pharma, which has a market capitalization of nearly $20 billion, the highest of all Indian generics firms, closed down 2.54 percent at 1,045.5 rupees on Friday.

“We have no comment on media conjecture,” a Sun spokeswoman said.

Sun Pharma reported earlier in the week a 23.4 percent rise in quarterly net profit to 10.12 billion rupees, beating market estimates.

It took the company 27 years to cross the $1 billion mark but another 36 months to cross $2 billion, which it did in the last financial year.

Sun Pharma is among the most profitable drug companies in the world and its stock has gained over 35 percent so far in the year since January. Sun Pharma last year acquired URL Pharma and DUSA Pharmaceuticals, both based in the United States. Its main US generics subsidiary is Caraco Pharmaceuticals, which is based in Detroit.

There has been media speculation that Sun Pharma may seek to strengthen its corporate portfolio with another high-profile acquisition. Sun’s founder Shanghvi said this week that the company, which already derives nearly three-quarters of its revenues from abroad, was focused on boosting its international presence.

Shanghvi founded Sun 30 years ago as a maker of psychiatric drugs.

AFP/The Local/at

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A demonstrator smokes a joint at the pro-cannabis Hanfparade in Berlin in August 2021.

A demonstrator smokes a joint at the pro-cannabis Hanfparade in Berlin in August 2021. Photo: picture alliance/dpa | Annette Riedl

The Social Democrats (SPD), Greens and the pro-business Free Democrats (FDP) are set to engage in coalition talks in a bid to become the next German government. And the future of cannabis will likely be one of the topics to be thrashed out.

In drug policy, the three parties are not too far apart in their positions. So it’s possible that the drug could be decriminalised.

However, nothing is set in stone and the parties still haven’t come to a common line on the question of where and to what extent cannabis could be accessed.

The leader of the Liberal FDP, Christian Lindner, has now come out in favour of allowing cannabis products such as hashish to be sold in a controlled manner.

Consumers should be allowed “to purchase a quantity for their own use, for example, in a pharmacy after health education,” Lindner told a live broadcast on German daily Bild on Sunday.

Lindner said he was sceptical about the sale in “coffee shops” according to the Dutch model. “I am in favour of controlled distribution, and therefore health education must be able to take place,” he said.

READ MORE: Patients in Germany still face hurdles accessing medical marijuana

People in the Netherlands can access cannabis products in coffee shops under the country’s tolerant drugs policy. However coffee shops have to follow certain strict conditions. For instance they are not allowed to sell large quantities to an individual.

Lindner said his main aims were about “crime and health prevention” and not with “legalising a right to intoxication”.

It’s not clear if Lindner advocates for prescription-only cannabis for medical use, or an over-the-counter model.

The FDP previously said that they they are in favour of the creation of licensed shops. Their manifesto highlights the health benefits, tax windfalls and reallocation of police resources that legalisation would create.

The Green party also want licensed shops, as well as a whole new approach to drug control starting with the controlled legalisation of marijuana. The Greens state that “strict youth and user protection” would be the centre point of their legislation and hope to “pull the rug from under the black market”.

The SPD also want a reform of Germany’s prohibition stance – but are more cautious than the smaller parties on the legalisation aspect. They would like to initially set up pilot projects.

READ ALSO: Why Germany could be on the brink of legalising cannabis

Controversial topic

So far, the sale of cannabis is officially banned in Germany. Possession of cannabis is also currently illegal across the entire country. Those caught carrying the substance can face anything from a fine to five years in jail.

However, the justice system generally looks away if you are caught carry small quantities for personal use unless you have a previous conviction.

The definition of personal use differs from state to state, with Berlin having the most liberal rules and Bavaria the tightest.

It is estimated that around four million people regularly use cannabis in Germany.

Representatives of police unions in Germany have warned against legalisation. They argue that cannabis is an often trivialised drug that can lead to considerable health problems and social conflicts, especially among young people.

Oliver Malchow, from the GdP police union, said that “it doesn’t make any sense to legalise another dangerous drug on top of alcohol”.

The current Ministry of Health also continues to oppose the legalisation of cannabis, a spokesperson for Minister Jens Spahn (CDU) made clear. Cannabis is a dangerous substance and therefore legalisation is not advisable, the spokesman said.

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