Sun Pharmaceutical Industries Agrees to Acquire Taro Pharmaceutical Industries in Transaction Valued at $454 Million

Business Wire, May 21, 2007

Litigation Relating to the Transaction

On May 10, 2007 Franklin Advisers, Inc. and Templeton Asset Management Ltd., the beneficial owners of approximately 9% of the Company's ordinary shares, filed an initiating motion in Tel-Aviv District Court seeking certain remedies intended to prevent alleged oppression of minority shareholders. They also filed a motion for the appointment of a special interim manager to review the Company's efforts to identify an appropriate transaction.

On May 19, 2007 Franklin Advisers and Templeton filed a supplemental request with the court indicating that they believed a transaction involving Taro was imminent, and seeking a temporary injunction to prevent the Company from entering into any transaction that might result in oppression of minority shareholders. If the court blocks the interim equity financing with Sun, Taro will not be able to make timely payment of the principal and interest payment due on its 2003 bonds on May 21, 2007. The motion for a temporary injunction is scheduled to be heard on May 21, 2007.

The Company believes that the proceedings initiated by Franklin Advisers and Templeton are without merit and are detrimental to the best interests of shareholders and the Company. The Company intends to contest the action vigorously.

Thomas E. McClary Appointed to Position of Chief Financial Officer

Taro Pharmaceutical Industries Ltd. also reported today that it has appointed Thomas E. McClary, C.P.A., to the position of Group Vice President and Chief Financial Officer, effective immediately. Ron Kolker, Group Vice President and Corporate Controller of Taro, has served as interim Chief Financial Officer of the Company following the departure of the Company's former CFO in October 2006.

Mr. McClary, 53, comes to Taro with more than 27 years of experience in finance and accounting. Prior to joining Taro, he was employed as Vice President of International Finance and Chief Accounting Officer at Ivax Corporation. Mr. McClary held increasingly senior positions at Ivax from 1998 until its acquisition by Teva Pharmaceutical Industries Ltd. in 2006. Prior to Ivax, Mr. McClary held positions that included Corporate Controller and Treasurer of Solopak Pharmaceuticals, Inc., and Senior Manager at Deloitte and Touche.

About Taro and Sun

Taro is a multinational, science-based pharmaceutical company, dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products. For further information on Taro Pharmaceutical Industries Ltd., please visit the Company's website at www.taro.com.

Established in 1983, listed since 1994 and headquartered in India, Sun Pharmaceutical Industries Ltd. is an international, integrated specialty pharmaceutical company. It manufactures and markets a large basket of pharmaceutical formulations as branded generics as well as generics in India, the U.S., and several other markets across the world.

SAFE HARBOR STATEMENT

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements that do not describe historical facts and statements that refer or relate to events or circumstances the Company "believes," or "expects" to happen, or similar language, and statements with respect to the various transactions with Sun described in this press release, all of which are contingent and subject to various conditions. Although Taro Pharmaceutical Industries Ltd. believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurances that its expectations will be attained. Factors that could cause actual results to differ include failure to consummate the agreements with Sun, actions of the Company's lenders, creditors and Sun, general domestic and international economic conditions, industry and market conditions, slower than anticipated penetration of new markets, changes in the Company's financial position, the outcome of current litigation by Franklin Advisers and Templeton Asset Management, litigation in any court in Israel, the United States, or any country in which Taro or Sun operate, litigation, regulatory actions and legislative actions in the countries in which Taro operates, future demand and market size for products under development, marketplace acceptance of new or existing products, either generic or proprietary, and other risks detailed from time to time in the Company's SEC reports, including its Annual Reports on Form 20-F. Forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligations to update, change or revise any forward-looking statement, whether as a result of new information, additional or subsequent developments or otherwise.