Sun Pharmaceuticals will spin off its research and development (R&D) activities into a new company called Sun Pharma Advanced Research Company (SPARC). The transfer will include the company’s New Chemical Entity (NCE) and New Drug Delivery System (NDDS) programmes, which have an estimated 100 scientists.
Sun Pharma will infuse $45 mn into the new company, to enable it to sustain its operations until revenues from out-licensing deal start flowing in. The company could be looking at raising funds for its new company through equity or debt. It is planning to invest $60 to $65 mn in the new research company in the next three years. Research for generic drugs will remain with the main company.
The de-merger will offer investors an option to separately hold investments in businesses with different return characteristics, depending on their risk and return expectations. The new research company, SPARC, is being valued at more than $450 mn. Simultaneously, the de-merger of Sun Pharma’s innovative R&D business could significantly de-risk the company’s core business.
Read the article in The Economic Times.
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