June 13 (Bloomberg) -- Sun Pharmaceutical Industries Ltd., India’s biggest drugmaker by market value, fell the most in two weeks in Mumbai after agreeing to pay more than five times what it had provisioned to settle patent litigation with Pfizer Inc.
Sun shares declined 2.7 percent to 954 rupees as of 9:56 a.m. local time, headed for the biggest loss since May 31, while the benchmark S&P BSE Sensex Index dropped 0.8 percent.
Sun and Teva Pharmaceutical Industries Ltd. will pay $2.15 billion to Pfizer and a partner to settle litigation over unauthorized sales of the heartburn drug Protonix, Pfizer said in a statement yesterday. Sun will pay $550 million as settlement, the Mumbai-based company said, compared with the 5.84 billion rupees ($100 million) it had set aside for the potential damages in November.
“The cash which will go out is going to come from Sun Pharma’s books, so to an extent, it’s going to hold up their” expansion plans, said Hitesh Mahida, an analyst at Fortune Equity Brokers (India) Ltd. in Mumbai. “They usually get a premium for their higher margins and high amount of cash.”
Sun and its group companies had 53.6 billion rupees of cash and short-term investments at the end of March, according to data compiled by Bloomberg.
The Indian drugmaker will continue to sell in the U.S. pantoprazole, the drug ingredient in Protonix, Sun said. Pfizer’s patent ended in January 2011.
Shares of Pfizer Ltd., the Indian unit of New York-based Pfizer, rose 1.8 percent in Mumbai trading.
To contact the reporter on this story: Ketaki Gokhale in Mumbai at email@example.com
To contact the editor responsible for this story: Jason Gale at firstname.lastname@example.org