Sun chief Dilip Shanghvi in Calcutta on Saturday. Picture by Kishor Roy Chowdhury

Calcutta, Sept. 9: Sun Pharmaceutical Industries, India’s fifth-largest drug maker, is eyeing acquisitions in the United States.

The company is sitting pretty on a kitty of $400-450 million that can fund multiple acquisitions in that country .

Dilip Shanghvi, chairman and managing director of the company, said Sun was keen to expand its presence in the world’s largest generic drug market, the US.

“There is opportunity worth $8-10 billion. We are a very small player there. To have a bigger pie, we have to look at inorganic growth,” Shanghvi said.

However, Sun is yet to appoint a merchant banker. Shanghvi said valuation would be the critical parameter as the company would like to get return on investment within four years.

Sun had acquired an ailing generic company in the US, Caraco Pharmaceutical, in 1997 and then turned it around over the last decade. Caraco is expected to do business worth $100 million this year.

At present, 40 per cent of Sun’s turnover comes from the overseas market with the US generics mart contributing 21 per cent.

Its generics business grew 28 per cent CAGR in that period. The company is targeting 50 per cent of sales from international business in the next two to three years.

Sun has three plants in the US and one of its unit back home is also approved by the US authority.

Demerger plan

Sun Pharma will demerge its advanced innovative research and development division into a new company to be listed on the bourses.

“The process of demerger will be over within this fiscal,” Shanghvi said.

The division will be called Sun Pharma Advance Research Company or SPARC and the paid-up capital would be Rs 20 crore.

At the initial stage, Sun will give it Rs 200 crore to fund the advance research programme till such time the company is able to generate its own cash flow.

The new entity will focus on allergy and anti inflammatory therapeutic area. It would try to develop new chemical entity (NCE) and novel drug delivery system (NDDS) in this area.

“We will support the company till it is able to raise new money on its own,” he explained.

The research pipeline of Sparc would be disclosed six weeks before split to help investors make informed decisions.