Indian drugmaker Sun Pharmaceutical Industries has entered a $48m agreement to acquire US eye care firm InSite Vision.

Under the deal, an indirect wholly owned subsidiary of Sun Pharma will start a tender offer to acquire all outstanding shares of InSite at $0.35 per share in cash.

InSite Vision is focused on developing new specialty ophthalmic products, including three late-stage programmes and the acquisition will help Sun Pharma, which is in the process of establishing a branded ophthalmic business in the US.

Last month, InSite Vision signed a definite agreement with Canadian drugmaker QLT for $0.25 and $0.30 per share, while it also included a built in clause that enabled for negotiations for any higher bidder.

Currently, InSite has terminated its discussion with QLT as the Sun Pharma’s bid is higher.

"The merger agreement with Sun Pharma provides a significant improvement in value for our stockholders."

In connection with the termination, InSite was required to pay a $2.66m termination fee to QLT, which the Sun Pharma subsidiary paid to QLT on behalf of InSite.

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Following completion of the new tender offer, Sun Pharma and InSite will complete a merger with InSite shares that were not tendered in the offer cancelled and converted into the right to receive $0.35 per share.

If the new merger deal is cancelled, InSite will be obligated to pay the Sun Pharma subsidiary a termination fee of $2.66m to reimburse it for the cancellation amount paid to QLT.

Approved by the boards of directors of both the companies, the new transaction will be completed through a tender offer in the fourth quarter of this year.

InSite Vision CEO Timothy Ruane said: "The merger agreement with Sun Pharma provides a significant improvement in value for our stockholders."

Currently, InSite is developing new specialty ophthalmologic products to treat diseases affecting the front and back of the eye.

It has two commercial products based on its DuraSite platform approved to treat bacterial eye infections, AzaSite (azithromycin ophthalmic solution) 1% and Besivance (besifloxacin ophthalmic suspension) 0.6%.