Drugmaker Sun Pharma and Merck Sharp & Dohme’s (MSD), wholly-owned subsidiaries, have mutually decided to “wind down” their joint venture due to changes in the strategic priorities of both the parent companies.

The decision to snap ties comes almost five years after the two companies came together, and this was announced following Sun’s board meeting on Friday. There will be no material impact of the development on Sun, the company said.

The investment in the venture is not significant and has been factored into the company’s financials over time, Dilip Shanghvi, Sun’s Managing Director, told analysts, without giving insights into the changing priorities.

Shanghvi was discussing the company’s financial performance for the third quarter (Q3) or three months ended December 31, 2015, including Sun’s remediation efforts on its Halol facility, under the United States Food and Drug Administration (USFDA) scanner.

Sun, however, clarified that both partners would continue their collaboration for other businesses, including the strategic India-specific co-marketing partnership for diabetes drug Sitagliptin and the global Tildrakizumab program.

MSD (the trade name for US-based Merck outside the US and Canada) and Sun had collaborated to develop and manufacture innovative and branded generic medicines for the emerging markets, company officials had then said.

The joint-venture was to have “equal representation” and would require investments and commitment from both partners, Shanghvi had then said. MSD was to provide the clinical and registration expertise, besides the geographical footprint, while Sun was to provide access to its research technologies and manufacturing facilities.

Remediation efforts Meanwhile, Sun said it had clocked a net profit of ₹1,417 crore for the three months ended December 31, 2015, as against ₹396 crore in the same period last year. The company recorded a total income of ₹7,082 crore in the period under review, as compared to ₹6,932 in the corresponding period last year.

The company managed this despite adverse currency movements and increase in research investments, Shanghvi said, adding that the projected synergy benefits of the Ranbaxy acquisition had begun to reflect. Sun’s sales in the US were $486 million for the quarter, a reduction of 11 per cent over the same period last year, and accounted for 45 per cent of the total sales. He said sales for the quarter were impacted primarily due to competitive pressure on some products and temporary supply constraints arising from remediation efforts at the Halol facility.

Shanghvi added that they would request the US FDA to re-inspect the Halol facility by the first quarter of FY17. The Halol facility had received a warning letter from the USFDA in December 2015.

India & other markets Sun said its emerging markets sales at $151 million for Q3 saw a 7-per-cent dip from last year and accounted for 14 per cent of total sales. The decline was on volatile currency movements in certain emerging markets, and a decision of not participating in low-margin businesses, the company said.

Sales of branded medicines in India for the quarter were at ₹1,890 crore, up 8 per cent from last year, accounting for 27 per cent of the total sales.

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