Mumbai: Sun Pharmaceutical Industries Ltd, India’s top drugmaker by market capitalization, reported a better-than-expected 91% rise in December quarter net profit on robust sales by Israeli unit Taro Pharmaceutical Industries.
Sales in the US also helped, said the company, which makes generic drugs and provides contract research and manufacturing services.
Sun Pharma’s consolidated net profit rose to Rs668 crore ($135.21 million) in the third quarter ended 31 December, from Rs350 crore a year ago.
Analysts estimated the net profit at Rs527 crore, according to Thomson Reuters StarMine data.
Sales rose 37.3% to Rs2,145 crore, it said.
Taro, in which Sun Pharma owns about 67% and has made an offer to acquire the company fully, reported a net income of Rs308 crore on a net sales of Rs732 crore in the quarter.
“Business performance is in line with our expectations,” chairman Dilip Shanghvi said in a statement. “We expect the momentum to continue.”
The company, however, warned the strong sales and profit growth of Taro might not be sustainable as it was driven by increased selling prices for select products in the US.
Valued at $11.34 billion, shares in Sun Pharma closed up were up 2.2% at Rs553.15 on Monday when the Mumbai market rose 0.14%.
US Sales Surge
Sun Pharma, which draws more than half of its revenue from the United States, also benefited from a sharp depreciation in the value of the rupee.
Its US formulations sales rose 47% to Rs1,028 crore in the quarter, when the rupee fell more than 7% versus the US dollar.
Its Indian rival Dr Reddy’s Laboratories Ltd also reported more-than-double sales in North America over the same period while Lupin’s business grew 32.4%.
Indian drugmakers, which account for about a third of US applications for approval to sell generics, are expected to add$2 billion to $2.5 billion in US sales in the next five years, doubling their revenue the country.
Drugs worth more than $140 billion are likely to go off patent in the next five years.
In the next few years, Sun Pharma, along with Ranbaxy Laboratories, Dr Reddy’s Laboratories and Lupin will compete for a host of big-ticket drugs losing patent protection.
These include Forest’s Alzheimer’s drug Namenda, anti-depressant Lexapro, and the blood clot drug Plavix, sold jointly by Bristol-Myers Squibb Co and Sanofi.
Sun Pharma’s Indian formulations business grew 17% to Rs695 crore compared with an 11% rise for Dr Reddy’s and 29.3% for Lupin.
“Although the last two quarters were kind of an aberration, Taro will continue to be the growth driver for the company,” said Siddhant Khandekar, analyst at ICICI Direct in Mumbai.
The Mumbai-based drugmaker’s operating margin was at a healthy 40%.
“Considering the profitability, the stock will remain at a high valuation trajectory in the future.”