ICICI Securities: Taro’s Resolution With Department Of Justice Removes Key Overhang On Sun Pharma
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ICICI Securities Report
Sun Pharmaceutical Industries Ltd.’s subsidiary, Taro Pharmaceutical Industries Ltd., has resolved all the cases adhering to the multi-year investigations by the DOJ (Department of Justice, Antitrust Division and Civil Division) in U.S. generic pharma industry.
Taro will make a total payment of $419 million, including $206 million for deferred prosecution agreement and $213 million to resolve all claims pertaining to federal healthcare program.
This amount of settlement is inline with street estimates based on earlier settlement by Sandoz for similar cases.
Taro has strong balance sheet with cash balance of over $1 billion which is yielding very low interest income and the settlement amount can easily be paid using this cash. We believe this removes the key overhang on stock’s valuation.
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