Sun demerges R&D to insulate core business.
Economic Times (New Delhi, India), February, 2006
Feb. 11--Sun Pharma's decision to demerge the new drug discovery and the new drug delivery system, portion of its R&D business, will insulate the company's core business from the risks associated with research. It also forces the R&D business to fend for itself for revenues and funds, which is good in the long run, but could create uncertainties otherwise.
Sun's R&D costs could fall by 35 percent- 40 percent after the demerger, thus lowering pressure on margins. Risk mitigation apart, a separate entity for research could significantly enhance R&D productivity.
A dedicated team of scientists, significant time, attention and commitment are needed for new drug discovery programmes to be successful. This model is unique in that Sun's investors will hold...
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