BackSun Pharma net profit falls 60% to `479 crore
Net profit in the June quarter fell to `479 crore from `1,204 crore from the year ago; revenue increased by 5%
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Sun Pharmaceutical Industries Ltd, India’s largest drug maker, on Tuesday posted a decline of 60% in consolidated net profit for the June quarter, hurt by one-time and exceptional charges.
Net profit in the three months to 30 June fell to ₹ 479 crore from ₹ 1,204 crore in the year-ago quarter. Revenue increased by 5% to ₹ 6,863 crore from ₹ 6,523 crore in the same period.
“Our performance for the quarter has been impacted by certain one-time and exceptional charges which will drive synergies and overall profitability improvement in the long-term," said Dilip Shanghvi, managing director.
Sun Pharma is in the process of integrating Ranbaxy Laboratories Ltd with itself after completing its $3.2 billion acquisition of the latter in March, after almost a year of navigating the regulatory gauntlet to create the world’s fifth biggest generic pharmaceutical company by revenue.
The company reported a one-time charge of ₹ 685 crore “on account of impairment of fixed assets and other related costs and write down of the carrying value and goodwill on consolidation."
The costs came from the “integration and optimization exercise" being undertaken at some of its manufacturing facilities, it said.
Last month, Sun Pharma warned that revenue may remain flat or decline this fiscal year as it integrates Ranbaxy and discontinues some of the smaller company’s “non-strategic businesses".
Profit for FY16 may also be hurt by costs related to the corrective steps to be taken to make Ranbaxy’s India plants compliant with US drug manufacturing standards, Sun Pharma said.
The US Food and Drug Administration (US FDA) has banned products manufactured at four of Ranbaxy’s Indian plants from being sold in the US market for violating production standards.
Daiichi Sankyo Co. in April last year agreed to sell its controlling stake in Ranbaxy to Sun Pharma. Since then, the US FDA has rescinded approvals for two of Ranbaxy’s products: generics of AstraZeneca Plc’s Nexium for heartburn and Roche Holding AG’s Valcyte.
Sun’s own Halol facility was inspected by the US FDA last year and received a Form 483 detailing possible deviations from good manufacturing practices.
Sales in the US were at $488 million for the June quarter, down 4% from a year ago, and accounted for 47% of the total sales.
“Sun’s US sales were affected by competition in sales of duloxetine (anti-depressant) and liposomal doxorubicin (oncology drug)," Shanghvi said in an analysts conference call.
The sale of branded prescription formulations in India for the June quarter amounted to ₹ 1,784 crore, up 11% from a year ago, and made up 27% of total sales.
Sun’s Israeli subsidiary Taro Pharmaceutical Industries Ltd posted net sales of $215 million, up from $130 million a year ago.
The company’s consolidated research and development (R&D) expenses in the June quarter were ₹ 511 crore, or 7.8% of sales.
“We continue to invest significantly in R&D and in building critical talent for enhancing our specialty and complex generics pipeline," Shanghvi said.
On Tuesday, shares of Sun Pharma barely budged, edging up 0.03% to close at ₹ 841.8 on BSE Ltd on a day the benchmark Sensex fell 0.84% to 27,866.09 points.
Blooomberg contributed to this story.
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