Sun owners back Phlox purchase

23 August 2004 00:01  [Source: ACN]

SUN Pharmaceuticals’ acquisition of Phlox Pharma has been approved by its shareholders, who recently agreed to a share-exchange ratio of 790 Rs10 (US$0.22) Phlox shares or 7900 Rs1 Phlox shares for every Sun Pharma share.

A Sun Pharma source said the acquisition of Phlox Pharma would give the former a very low-cost entry to the second- and third-generation cephalosporins market – ‘about a third the cost of an average pharmaceutical company in India’s regulated market’. Phlox Pharma has a bulk-drug manufacturing plant in Baroda, India, with a production capacity of 37 tonne/year of higher-end cephalosporins.

He said the market for first-generation cephalosporins had become too competitive and the cost of transforming a first-generation cephalosporins plant to enable it to produce the latest cephalosporins would have been ‘prohibitive’. He declined to say how much that cost would have been.

In contrast, the source said the market for the higher-end second- and third-generation cephalosporins ‘remains attractive for the next five to seven years’.

The acquisition of Phlox Pharma, the source continued, would not involve taking over any of its debts. ‘Anyway, Phlox’s total debt is small,’ he said, but declined to reveal what that amounted to.

Sun Pharma’s formulations-manufacturing facilities are in Panoli, Halol and Ahmednagar.

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