Sun Pharma to sell US arm Ohm Laboratories: Report

US market makes up half of Sun's revenue but business faces huge price erosion, regulatory issues

Sun Pharmaceutical Industries is looking to sell its US subsidiary, Ohm Laboratories, as it looks to consolidate its operations in its biggest overseas market, according to a television report.

The US market accounts for about half of the drug maker's consolidated revenue but the business is under pressure because of price erosion and regulatory issues.

Ohm Laboratories which has manufacturing facilities for oral solids in New Jersey became a part of Sun Pharma following its Ranbaxy acquisition in 2014. In 2015 Ohm Laboratories posted a revenue of Rs 2,063 crore and a net loss of Rs 118 crore.

Sun Pharma has a consolidated revenue of over Rs 28,000 crore and net profit of Rs 4715 crore in FY 2016.

A Sun Pharma spokesperson declined comment. A television report said the sale could fetch $80-100 million.

Sun Pharma has 47 manufacturing sites around the world including five in the US. In recent years it has hived off some of its facilities in US as a part of consolidation efforts. This includes sale of two oral solids dosage manufacturing units in Philadelphia and Illinois state to Frontida BioPharm in 2016 and sale of its plant in Ohio to Nostrum Inc in 2015.

In 2015 the company had put a plant in Ireland on block to optimise its overall manufacturing base. It had said decisions are being made to either close or divest some facilities following its merger with Ranbaxy. The company continues to operate its facilities in Ireland and has not disclosed further on its divestment plans.

Sun Pharma managing director Dilip Shanghvi is targeting $300 million synergy benefits from Ranbaxy merger by FY 2018. These include synergies from R&D expertise, wider product portfolio and rationalisation of manufacturing footprint.