Company Watch

Sun Pharma plans to de-merge R&D

Our News Bureau - Mumbai

While a lot of pharma companies are chanting the mergers and acquisitions mantra, Sun Pharma plans to swim against the trends by going through a de-merger. Sun Pharma's Board of Directors approved the de-merger of the company's innovative R&D. The NCE and NDDS programs of the company will be transferred to a new company with the same equity holding pattern.

In addition to the approximately 100 person staff of scientists running programs in NCE and NDDS, assets including cash and equipment, would be transferred to the de-merged company. The de-merged entity will be listed on the BSE and the NSE after the requisite clearances.

The difference between generic reverse engineering and innovative R&D in terms of risk profile, longer timeframes and considerably larger resource requirements in the future, were cited as key reasons for the split. Dilip Shanghvi will continue to chair the de-merged company.

The board ratified de-merger scheme proposes April 1, 2006 as the effective date of the de-merger. As part of the scheme, shareholders of Sun Pharma would be allotted an equity share of Rs 1 each for each share of Rs 5 of the parent company, held on the record date. This draft Scheme of de-merger is subject to approval by shareholders, necessary regulatory authorities and court clearances.