Sun Pharma to form new separate R&D group

India's Sun Pharmaceuticals says that its board of directors has approved the demerger of the firm's R&D and drug discovery sections into a new company. The split, which is scheduled to begin on April 1 this year, will enable the new firm to focus on research projects with long-term timeframes, while allowing Sun Pharma to make headway in its generic drug business activities.

The new and, as yet, unnamed R&D company will be chaired by Dilip Shanghvi, Sun Pharma's current chairman, and will inherit assets, resources and 100 research scientists from Sun. Shareholders in Sun will, following completion of the demerger, be allocated one equity share of 1 rupee in the new firm for each share of 5 rupees of the parent company held at the time.

The equity shares of the new firm would then be listed on the National Stock Exchange and the Bombay Stock Exchange, subject to compliance with listing requirements. Sun Pharma added that it expected a reduction in its costs of around 10-11% of sales, which it currently spends on R&D, and would still seek suitable corporate acquisition opportunities in the USA, which it had previously stated as an aim.