For the 29,000 employees across Sun Pharmaceutical Industries and Ranbaxy Laboratories, history was made this week, as the two companies sought to merge and create the country’s largest drug-maker.

But Sun’s journey has only just begun as it sets out to integrate two cultures and deal with Ranbaxy’s legacy issues, involving regulatory woes in the US for its India-based plants.

If that was not enough, Sun now faces questions on whether the market had got wind of its $4-billion (₹24,000 crore) proposal to buy Ranbaxy in advance.

“There was no insider trading, that’s for sure,” says Israel Makov, Sun Pharma’s Chairman, responding to questions on the spike Ranbaxy shares had seen prior to the deal announcement. The development attracted attention more so, because Silverstreet Developers LLP, a Sun subsidiary, held 1.6 percent equity in Ranbaxy, owned by Japanese drug-maker Daiichi Sankyo.

Makov told Business Line : “Firstly, from time to time, we make investments in stressed companies. So, it’s not the first example. Secondly, this investment was made by the subsidiary before we entered into any meaningful negotiation with Daiichi, before Daiichi had agreed to sell… before we (had) seen any confidential information. So how can it be insider trading?”

Sun’s management had earlier clarified that its subsidiary’s shares in Ranbaxy would get annulled when the transaction is completed. A market analyst said Sun’s admission on cancellation could also be risky “since it means you could have known of the deal, since you are invested in Ranbaxy”.

However, Makov defended the deal. “The cancellation is a technical issue. We buy all shares of Ranbaxy, and for each shareholder, we give shares of Sun. So we give a subsidiary of Sun shares of Sun – so it is cancelled... There was no insider trading, that’s for sure.” Few people knew about the negotiations in both companies, he said. “There was no leak from the company.” In fact, “one day, they will learn of this deal in business schools, not only on keeping the details close, and use only advice you need to use. We did all the negotiations outside the country.”

FDA woes

On dealing with Ranbaxy’s US regulatory problems, Makov said: “We are a hands-on company. It’s a major focus for us. We will change the way to look at it.” Besides, all companies in the industry, even the best companies, run into trouble from time to time and manage to resolve it.

Addressing the huge integration that lies ahead, he said: “We look at employees as an asset and not liability”. Sun would look to guide people, make them more accountable and introduce management systems, and motivate employees to increase productivity, he added. “Our eyes are focused on Sun….We are going to be Sun and we don’t have a megalomanic aspiration to be Teva or Facebook.” All Sun wants is to give shareholders a standard of profitable growth, he added.

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