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Mumbai , Aug. 10

IN its second major overseas acquisition, Mumbai-based Sun Pharma has bought US-based Valeant Pharma's manufacturing operations in Hungary at an undisclosed price.

The acquisition of Valeant's raw materials and dosage-form manufacturing operations in Hungary also marks Sun Pharma's foray into the European market, in terms of having a physical base there.

A Valeant Pharma release said that the Hungarian operations that it sold to Sun Pharma had already been discontinued. No details were available from Sun Pharma on whether the deal included the workforce, if any.

The last major overseas acquisition was in 1997, when Sun Pharma acquired about 30 per cent equity in Detroit-based Caraco Pharm Labs, a generic company that manufactures and markets generic drugs and private label prescription drugs. Sun Pharma at present holds about 69 per cent equity in Caraco.

Sun Pharma had issued a $350-million FCCB late last year, primarily to support an acquisition in the US. However, high valuations are inhibiting its plans in the US.

Explaining the significance of having a base in the European market, an analyst tracking the segment said that it is the "second-line" strategy for Indian companies, after the US. The cost structure in Hungary would be "kinder" than other developed markets, another industry representative said.

Meanwhile, Sun Pharma's Chairman and Managing Director, Mr Dilip Shanghvi, said in a statement: "The purchase of this site offers us an early opportunity to enter the European generic space, building on our strengths in bulk actives and product development. This will complement our European entry strategy with our UKMHRA approved plant in India, and will allow for a quick product roll out."

According to Mr Timothy C. Tyson, Valeant's President and Chief Executive Officer: "The sale of the Hungary unit represents the final piece of our planned divestiture of non-core operations. Our core specialty pharmaceuticals business continues to strengthen and we have made substantial progress in achieving our business metrics. The divestiture of our remaining manufacturing facilities continues to advance aggressively and we remain confident in our ability to reduce the network to four manufacturing sites by the end of 2006." Valeant expects to rationalise its 15 manufacturing facilities down to five by 2006, according to details on Valeant's Web site.

An analyst tracking Sun Pharma expected the latest acquisition to become operational sooner than later, as the company usually invested money in its facilities and turned around the operations in a short period of time.

The last several months have seen Indian pharma companies undertake global transactions like never before in its 50-year history.

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