Mumbai: India’s most valuable drug maker by market capitalization, Sun Pharmaceutical Industries Ltd, has reported a 29% growth in net profit to Rs227.2 crore for the first quarter ended June on the back of 30% growth in international business and 121% growth in net interest and other income.
Consolidated net sales increased 23% to Rs627.5 crore during the first quarter of fiscal 2007-08.
The company’s US generics business—Caraco Pharmaceutical Laboratories Ltd—announced sales growth of 43% to $35 million for the first quarter. Caraco recorded a net income (profit) of $8.5 million during the period, up 70% from the corresponding quarter of 2006-07.
“Despite the significant appreciation of the rupee against the dollar, we’ve shown strong performance this quarter, delivering robust growth and operating profitability. This resilience, and our strong generic pipeline across markets, is the reason we view the increasingly competitive pharma markets as an opportunity, and not a threat,” said Dilip Shanghvi, chairman and managing director of Sun Pharma.
The company also announced that it proposes to raise Rs3,500 crore for future international acquisitions of companies that make generics, or off-patent drugs. “The proposed capital raising is to build up a war chest, to tap into consolidation opportunities,” Shanghvi said.
Sun Pharma’s shares gained 0.68% on the Bombay Stock Exchange to close at Rs986.9.
Sun Pharma’s domestic business also reported reasonably good growth. The domestic formulations business grew 26% to Rs366.9 crore. The business now contributes 56% to total sales. The company launched nine new products during the quarter. “The company’s domestic business has exceeded expectations and grown faster than the industry,” said a research analyst with a Mumbai-based brokerage house who asked not to be identified citing his company’s policy.
Manoj Garg, research analsyt at Emkay Shares & Stock Brokers Ltd, said in an interview last week that Sun Pharma was “a strong player in drugs that treat lifestyle diseases and chronic conditions” and that this “ensures that its performance in the domestic market is consistent.”
The company said that its consolidated R&D expense for the quarter was Rs60.8 crore. This translates into 9.9% of net sales. The domestic drug market grew by 12% during the quarter. “Operating margin decreased by 119 basis points to 34% due to higher R&D charge and increase in manufacturing costs,” said an analyst at a Mumbai-based brokerage. “The costs of innovative R&D have been booked in the new company,” a company statement said.
Sun Pharma recently listed its hived-off drug discovery company—Sparc (Sun Pharmaceuticals’ Advanced Research Centre) Ltd.
On its recent acquisition, Taro Pharmaceutical Industries Ltd, Sun Pharma said that the Israel-based company would reschedule its shareholder meetings in Tel Aviv, Israel, from 23 July to 25 September in order to allow shareholders additional time to fully consider the proposed transaction with Sun Pharma. Earlier, two institutional shareholders in Taro, Franklin Advisers Inc. and Templeton Assets Management Ltd, and their representatives had objected to the transaction saying that it was not in the interests of minority shareholders.
Analysts expect Sun Pharma to do well. “There are lots of factors that will be positive for the company. It has a good pipeline of future launches for the US market. The new products, including hormones and steroids, are complex and will help the company have an edge over other generic players in the regulated markets,” said a Mumbai-based pharma sector analyst who did not wish to be identified. “They have a reputation for turning around their acquisitions, so, in the long term we expect the company to do well and continue to add wealth to investors,” Garg had said last week.