Item 1.01. Entry into a Material Definitive Agreement.

On January 19, 2007, the Company entered into a three-year marketing agreement with Sun Pharmaceutical Industries Limited (“Sun”), its majority shareholder. Sun has and will have, various abbreviated new drug applications (“ANDAs”) awaiting approval that it has filed directly with the FDA. During this three-year agreement, the Company will purchase selected products offered from Sun that have or will have gained FDA approval. This agreement was approved by the Company’s Independent Committee comprised of the Company’s four independent directors. Caraco will market and distribute these products in the United States and Puerto Rico as part of our overall product portfolio. This agreement will complement our current Sun technology transfer agreement, third party development agreements and our internal research and development. This agreement will potentially enhance the size of our current and future product line we offer to our customers. We will purchase selected products from Sun at a mutually agreed transfer cost and market these products to new and existing customers. Profit margins will be reported separately for product sales included in this agreement to provide clarity on the distribution gross profit margins versus our manufacturing profit margins and the Company’s overall profit margin percentage.

The Company has redacted certain portions of the Exhibit, pursuant an FOIA Confidential Treatment Request pursuant to Rule 24b-2, under the Securities Exchange Act of 1934, as amended. The application for Confidential Treatment was mailed to the Secretary of the Commission on January 24, 2007. The omitted material has been included in the application for Confidential Treatment. 

The foregoing summary of the marketing agreement is qualified in its entirety by reference to the marketing agreement which is filed as Exhibit 10.20 to this Form 8-K.