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UPDATE 1-India's Sun Pharma plans gradual phase-out of Ranbaxy-branded drugs in US -sources

in US -sources@

* Sun Pharma plans to preserve Ranbaxy brand - executive

* Making India plants FDA-compliant top priority for Sun

* Fixing Ranbaxy is 'largest challenge we've had' - exec

(Adds Sun Pharma comment, details on turnaround plans)

MUMBAI, April 9 (Reuters) - India's Sun Pharmaceutical Industries Ltd plans to begin phasing out sales of generic drugs branded as Ranbaxy Laboratories Ltd products in the United States after completing a $3.2 billion takeover of its loss-making rival, sources with direct knowledge of the matter said.

Ranbaxy drugs sold in the United States will be gradually rebranded as Sun Pharma treatments as part of a strategy to turn around the company being bought from Japan's Daiichi Sankyo Ltd . The brand is likely to continue to be present in other markets, the sources said.

The sources declined to be named as they were not authorised to speak to the media on the subject.

Uday Baldota, Sun Pharma's senior vice president of finance and accounts, didn't comment directly when asked whether Sun Pharma will phase out Ranbaxy-branded products in the United States. "Overall Ranbaxy brand has a value," he said. "We will find ways of using it and preserving it."

The plan to phase out the brand from the United States will be part of a slew of changes at Ranbaxy, including an intense lobbying push with the U.S. Food and Drug Administration (FDA) to lift bans on exports from Ranbaxy's India plants over production quality concerns, the sources said.

Sun Pharma concedes the road to the recovery at Ranbaxy is set to be long and challenging. The all-share acquisition will create India's biggest and the world's fifth-biggest generic drugmaker with combined sales estimated at $4.2 billion.

"(The Ranbaxy challenge) is quite big. In absolute size it is the largest challenge that we've had," Baldota said. "It will take time, it is not going to come easily, it will take a lot of effort, but hopefully we should be able to help them resolve the problem."

Some U.S. doctors are becoming concerned about the quality of generic drugs supplied by Indian manufacturers following a flurry of recalls and FDA import bans on companies such as Ranbaxy and Wockhardt Ltd.

Sun Pharma, which has been the subject of comparatively fewer regulatory actions in the past, on Monday agreed to buy Ranbaxy in an all-share deal, betting it can fix the factory quality glitches that plagued Daiichi Sankyo and got Ranbaxy's India-made drugs barred from the United States.

With an eye on competing with bigger global rivals such as Teva Pharmaceutical Industries Ltd and Sandoz, the generic division of Novartis AG, Sun Pharma has said making Ranbaxy's India plants FDA quality-compliant again is its top priority.

(Reporting by Sumeet Chatterjee and Zeba Siddiqui; Editing by Kenneth Maxwell)