Sun Pharma signals willingness to raise debt for acquisitions as cash pile swells to $3.2 bn

Sun Pharma

• Sun Pharma open to acquisitions but will remain disciplined on dealmaking
• Company has $3.2 billion net cash, ready to raise debt for the right opportunity
• Organic growth remains Sun Pharma's top priority despite M&A appetite

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Sun Pharma said it remains open to using its balance sheet more aggressively to pursue acquisitions, even as India’s largest drugmaker maintained that it will remain "disciplined" on dealmaking.

Chairman Dilip Shanghvi told analysts that the company is willing to lever up for the right opportunity.

“For acquisition, if it is necessary, we are comfortable raising debt,” Shanghvi said on the Q3 FY26 earnings call, while declining to quantify how much leverage the company would be willing to take on.

The comments come at a time when media reports have speculated about Sun evaluating large international assets, though the company has dismissed these reports as speculative. Still, the management used the call to outline the broad contours of its M&A appetite: innovative medicines in the U.S., and smaller product‑led or company‑level acquisitions in emerging markets.

“US continues to be an important part of our focus, specifically for the innovative medicines… For emerging markets, we’re looking at tuck‑ins or smaller acquisitions,” Shanghvi said on M&A strategy. He added that Sun would pursue a deal “only if we think that it can help us strengthen our long-term strategic capability.”

Managing Director Kirti Ganorkar, responding to a question on leverage thresholds, signalled caution. “It all depends on the target’s cash flow profile and our confidence that we can repay… Why go into an area where we have no specific information?” he said, pushing back against attempts to extract a numeric comfort zone for debt.

The company has ample firepower if it does choose to deploy capital.

CFO Jayashree Satagopan said Sun ended December with $3.2 billion in net cash, underscoring one of the strongest balance sheets in the sector. “Our balance sheet continues to be strong with a net cash of $3.2 billion at the consolidated level,” she said.

Despite its openness to M&A, the company stressed that organic growth remains the priority. “Our focus is on finding a way to grow our business organically at a rate so that we continue to be an attractive investment opportunity for shareholders,” Shanghvi said.

Sun Pharma has been expanding its specialty and innovative medicines businesses globally, adding to R&D intensity and launch expenses. But management reiterated that the goal is to avoid deals that may distract or dilute execution.