Sun Pharma replaces formulations distributor with own unit

Drugmaker Sun Pharmaceutical Industries Ltd said on Tuesday it will make its unit the new distributor for its domestic formulations business, replacing Aditya Medisales Ltd.

The company had last week asked capital market regulator Securities and Exchange Board of India (SEBI) to look into a media report about an alleged complaint by a whistleblower relating to certain transactions involving the company and its co-promoter that had led to a sell-off in the company's shares.

The

whistleblower had alleged that Sun Pharma's distributor Aditya Medisales had transactions worth more than Rs 58 billion ($814.31 million) with Suraksha Realty, controlled by Sun's co-promoter Sudhir Valia, a report by Moneylife magazine said. Reuters was unable to review the document.

Shares rose as much as 4.3 per cent in early trade on Tuesday, posting their biggest daily percentage gain since December 11, with investors welcoming the development. Sun Pharma did not name the unit replacing Aditya Medisales in its statement to exchanges, but said the change will be effective by the first quarter of fiscal year 2020. The drugmaker also denied giving any loans or guarantees to Suraksha Realty, adding that it does not have any financial deals with the Mumbai-based company.

As of March 31 2018, Sun Pharma owed Rs 22.38 billion to Atlas Global Trading for damages related to a patent litigation settlement. Atlas will assign its rights and obligations to one of Sun Pharma's unit, settling all loans to Atlas. ($1 = INR 71.2260)