Milmet Laboratories, promoted by Girish and Sailesh Desai, operates in the area of opthalomolgy and controls roughly 10 per cent of the estimated Rs 100-crore market in this segment. The boards of both companies are expected to meet on Wednesday to consider the appointment of valuers for the proposed merger.

The deal with Milmet, experts say, would serve as an effective entry point for Sun's pipeline of products in the ENT category and the potential partners expect to capture 30 per cent of the eye-care market (estimated at Rs 30 crore) within the next two years. Key players in the opthalmology market include FDC and Allergan

MilmetLaboratories would bring with it a field force of roughly 100 and a basket of brands like Ketlur (for ocular itching), even as Sun is expected to to set up an independent ENT division to retain its specialty focus.

Sun has four specialty units namely Aztec (for cardiovascular products), Synergy (the psychiatry and neurology specialty division), Sun (mainly for gastroenterology products) and Inca Specialities (for high tech biologicals in critical care areas).

The proposed merger, experts add, is also in line with Sun's broad strategy of concentrating on niche segments like cardiovasculars, gastro-intestinals, and oncology. "Customer-based divisionalisation, backed by a spate of product offerings that compete in large segments" forms part of Sun's strategy to build volumes while retaining core strengths as a specialty company, they said.

Sun Pharma, which shifted base to Mumbai recently from Baroda, acquired a substantial stake in the Detroit-based Caraco Pharma Laboratories in August 1997. Theinternational buy-out came on the back of a strategic acquisition of Gujarat Lyka Organics in November 1996 and MJ Pharmaceuticals in January 1997.

Sun then sewed up an amalgamation with Tamil Nadu Dadha Pharmaceutical Industries in late 1997 and was more recntly in the news for the buyout of a clutch of brands (with a cumulative turnover of around Rs 50 crore) from the Hyderabad-based Natco Pharma.