The Hindu Business Line : Partner for Sun Pharma's de-merged entity ruled out

MR DILIP S. SHANGHVI (right), Chairman and Managing Director, Sun Pharmaceuticals Industries Ltd, and Mr Sailesh T. Desai, Executive Director, at a press conference in Chennai on Saturday. — Bijoy Ghosh

Chennai , Sept. 23

The de-merger of Sun Pharma's `innovative research division' will happen within a couple of months. The Chairman and Managing Director of the company, Mr Dilip Shanghvi, today ruled out any joint venture partner or private equity investor.

At a press conference here, Mr Shanghvi said that the objective behind the de-merger was to recognise the different natures of the products and research businesses. Investors would want to value the two businesses differently and the de-merger would give them an opportunity to do so.

"We have enough money," he said, when asked if the de-merger was to facilitate investments into the new company. Mr Shanghvi observed that managing a regular business was very different from "managing a great idea," where the delivery of results could take time.

Sun shareholders will get one share in the de-merged entity for every share they hold. Mr Shanghvi said that about a month before the new company would get listed on the stock exchanges, the company would share with shareholders and investors details of the major lines of research of the de-merged entity. When he was asked about the $450-million "war chest", comprising funds raised through a FCCB issue a year-and-a-half ago, which was still largely kept idle in anticipation of an acquisition opportunity, Mr Shanghvi said that Sun would like to be conservative.

"The moment you get into yield-enhancing activities, you take risks," he said, adding that Sun would not take risk with investors' funds.

Answering a question, Mr Shanghvi said that Sun's $ 23-million acquisition of Able Lab, US, last year had proved to be good. The company, he noted, had 40-odd products under filings with the US Food and Drug Administration. But the FDA, having found some of the data "unreliable" had rejected all the applications. After Sun took it over, it examined the product filings and found many of them good. Indeed, of the 50 ANDAs in the pipeline (filed for FDA approval), many are from Able Lab, Mr Shanghvi said.

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