Japan's Daiichi Sankyo set to sell its entire 9% stake in Sun Pharma for Rs 18,000 crore

MUMBAI: Japanese drugmaker Daiichi Sankyo will exit from Sun Pharma by selling its 9% stake in India’s largest drugmaker by market value for roughly Rs 18,000 crore in block trades in the stock market, two people with direct knowledge of the development said. Daiichi, which sold Ranbaxy Laboratories to Sun Pharma for $3.2 billion in April 2014, has appointed Goldman Sachs to execute the sale on Tuesday.

The shares of Sun Pharma cracked over 10% intraday to Rs 933 in early morning trade.

The sale will bring the curtains down on a harrowing chapter for the Japanese drugmaker which began when it purchased Ranbaxy in 2008. It suffered a series of jolts when the US FDA pulled up Ranbaxy for technical deficiencies and accused the firm of faking test results to obtain clearances for its products. Daiichi was forced to pay $500 million in settlement.

Ranbaxy’s value dropped steeply due to the disputes, so much so that its shares were trading at Rs 460 at the time of the Sun purchase last year. Daiichi’s purchase price from Ranbaxy shareholders was Rs 737 in 2008 though the Delhi-based firm’s shares never touched that level, having peaked out at Rs 660.

Last year’s purchase of Ranbaxy by Sun gave Daiichi a 9% stake in India’s biggest and most profitable pharma company by market cap. Huge appreciation of Sun Pharma shares since the announcement of merger of Ranbaxy with Sun Pharma could be the reason for the Japanese drugmaker’s exit.

Sun’s shares have gained roughly 68%, which gives Daiichi a value of $3.3 billion for the stake.

Though the sale will not totally compensate for all the losses suffered in the Ranbaxy investment, the gain comes at a time when the drugmaker is troubled with challenges related to forging new growth drivers, as patents on its star products are nearing expiry and it looks at ways to boost earnings.

ET learns that shares will be sold at a discount to the Sun Pharma’s closing price of Rs 1,044 a piece on Monday. Sun shares ended the day up 0.66%, bucking a massive selloff on the market.

Daiichi’s stock, listed on the Tokyo Stock Exchange, closed at JPY 1964.5. The stock has gained a modest 12% in the past one year, even as Nikkei 225 Index has appreciated 35% during the same period. Both Daiichi and Sun Pharma did not respond to emailed questionnaires from ET.