Piramal Heathcare Ltd said on Wednesday its founder has no proposal to sell any stake in the company, sending the shares down 8 percent.
Earlier in the day, shares of Piramal Healthcare had risen more than 6 percent on market expectations that the company was in talks to sell the firm to a global pharma major.
French drugmaker Sanofi-Aventis and Pfizer were in negotiations to acquire Piramal Healthcare, local television channels reported on Wednesday.
Shares in Piramal Healthcare Ltd rose more than 5 percent in a weak market on Wednesday on market talk the Indian drugmaker was in talks to sell to a global pharma major.
French drugmaker Sanofi-Aventis and Pfizer Inc were in negotiations to acquire Mumbai-based Piramal Healthcare, local television channels reported on Wednesday, citing sources.
A spokesman at Piramal, which has long been seen as a takeover target, declined to comment.
At 10:35 am, shares in Piramal Healthcare, which the market values at $2.5 billion, were up 3.8 percent at 562.70 rupees, after having risen as much as 5.6 percent while main Mumbai market was down 1.1 percent.
"Piramal could be an attractive target for any big pharma company who are trying to enhance their presence in key emerging markets and India is a very important emerging market," said Bino Pathiparampil, an analyst with brokerage IIFL.
"The main strength of Piramal is its domestic business."
CNBC TV18 reported Pfizer was the highest bidder for taking over Piramal and the deal size could be between $1.5 billion and $1.8 billion. It said two other global drugmakers were also in the fray and the takeover talks were in the final stages.
ET NOW television channel said Sanofi-Aventis could acquire Piramal.
"It seems almost 100 percent certain that Sanofi will get it," one person familiar with the situation but not directly involved in the talks told Reuters in London on Tuesday.
Both Sanofi and British drug firm GlaxoSmithKline have been linked in the past to a bid for Piramal's formulation business. Glaxo, however, has not been involved in talks for many months, the person said.
Sanofi and Glaxo declined to comment on Tuesday.
A deal with Piramal would be an endorsement of Sanofi-Aventis CEO Chris Viehbacher's drive into emerging markets and underscore the key role that India plays as a supplier of cheap medicines to wider markets.
Last July Sanofi took control of unlisted Indian vaccines maker Shantha Biotechnics and other multinationals have also stepped up alliances with local drugmakers recently.
In the past, Western drugmakers have viewed Indian generics companies with deep suspicion. But attitudes have changed as slowing markets at home and a "cliff" of patent expiries have forced big drugmakers to explore new business models.