Sun Pharmace-uticals' acquisition of a majority stake in bulk-drug producer, Gujarat Lyka, has not conformed to its original plans of exploiting the export market.
The falling prices of oral cephalosporins, such as cephalexin which Sun was supposed to source from Gujarat Lyka, have been cited as the reason for this development.
Sun Pharma holds 57 per cent in Gujarat Lyka, while the promoters - the Gandhi family - hold 26 per cent, and the rest is held by institutions and individuals. Sun Pharma had acquired this stake some years back.
More From This Section
Sun was supposed to export bulk active cephalexin and cephalosporin. However, with prices crashing the company's export plans suffered heavily. "We had actually decided to export formulations made at the M J Pharma plant to the US by sourcing the bulk active from Gujarat Lyka," a Sun spokesperson said. However the fall in prices has made the company reconsider its plans.
The company will subsequently decide whether to hold or sell the stake in Gujarat Lyka. The decision depends on Lyka's work on new third generation cephalosporins.
Gujarat Lyka is a bulk drugs manufacturer producing cephal-exin, cefotaxime, and amoxycillin.
However, industry sources state that Sun is unlikely to hold on to its stake. The company is believed to be looking for buyers for the 57 per cent. However, no confirmation on this could be obtained.
Sources also say that other Indian companies like Lupin had first hit the export market for cephalosporins, eroding margins by the time Sun joined the fray. Sun, being a high margin player, is perhaps unwilling to continue in such a market unless it gets a better deal, the sources opine. Sun's decision to offload its stake in Gujarat Lyka will also depend on the offers it gets, the spokesperson said.