The Hindu Business Line : Sun Pharma deal may not upset Taro’s outsourcing

Mumbai, Sept. 6 Delay in the acquisition process of the Israeli drug-maker, Taro Pharmaceuticals, by the Mumbai-based Sun Pharma may not quite cast a shadow on the two independent outsourcing deals that Taro had formalised with J.B. Chemicals and Alkem Laboratories.

Drug deals

Taro had announced separate drug-development deals with the two Mumbai-based companies, within the span of a fortnight between December 2005 and January 2006. The Rs 1,000-crore Alkem was to supply four antibiotic formulations, which it was to supply from its plant at Daman.

J.B. Chem had an agreement to jointly develop products for the US market. Neither company had disclosed financial details of their respective contracts.

Dynamics, however, changed in May this year, when Sun Pharma signed an agreement to acquire Taro Pharma in a $454-million deal. The deal, touted to be the second overseas acquisition by an Indian drug company, however, ran into delays with Taro’s minority shareholders alleging that they have been discriminated against.

Taro’s shareholders meeting has been rescheduled twice over allowing them time to review the updated financial information in conjunction with the merger proposal from Sun Pharma.

No slowdown of work

Work on the drug development deals with Taro is unlikely to slowdown, say industry representatives familiar with the development. When the Sun acquisition of Taro goes through, the outsourcing commitments would shift to the new owner, they point out.

Much also depends on the safe-guards billed into the agreement, that outlines conditions under which the three companies involved can call off the deal, if required.

Related Stories:
Taro shareholders given time on Sun Pharma’s proposal
Sun Pharma buys Israel co for $454 m

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