Mumbai: Sun Pharmaceutical Industries Ltd and Cipla Ltd, India’s largest drug makers by market capitalization and revenue, respectively, on Wednesday posted a decline in sales growth for the quarter ended 30 September.
A 3.5% decline in sale of finished products pushed down growth in Cipla’s sales in the September quarter by 6.4% over the same three months last year to Rs1,383.91 crore.
A complete halt of operations at Sun Pharma’s US subsidiary Caraco Pharmaceutical Laboratories Ltd saw sales grow marginally by 0.5% to Rs1,185.17 crore this quarter.
The US drug regulator earlier this year seized all inventories at Caraco’s Michigan plant after it failed to comply with manufacturing quality norms.
“While Sun Pharma has comparatively longer-term issues on the US market front, Cipla’s lower sales seems a temporary problem and would not impact the performance of the business for long,” said a Mumbai-based sector analyst tracking Sun Pharma and Cipla at a foreign brokerage.
However, Cipla’s increased dependence on the local market could affect its profits, he said on condition of anonymity. Cipla managed to report a 82.1% increase in net profit to Rs275.74 crore, aided largely by a favourable foreign exchange situation and a decrease in operational expenses.
Sun Pharma saw its net profit fall 11% to Rs453.81 crore from Rs512.77 in the same period last fiscal.
“Caraco, which signed a consent decree with the US FDA (Food and Drug Administration) last month, continues to work towards regaining full manufacturing quality norms compliance,” said Dilip Shanghvi, chairman of Sun Pharma. The company expects to grow profitably, he said.
Cipla’s joint managing director Amar Lulla said the lower growth in sales was primarily because of the high base in the same quarter in the previous fiscal as well as a delay in availability of certain key raw materials.
“The growth in domestic sales was also lower because of seasonal variations,” Lulla said. Cipla also saw better operating profits from a changed product-mix strategy, especially a lower contribution of anti-retroviral products.
Sun Pharma had a high base in the year-ago quarter in sales as well as profit as it had exclusive generic launches in the US market that contributes at least 30% of its annual revenue but has now been hurt by the standstill at Caraco, as well as legal costs arising from issues raised by FDA.
Sun Pharma shares were up a marginal 0.87% to close at Rs1,377.70 on the Bombay Stock Exchange on Wednesday. Cipla’s shares rose 1.62% to close at Rs300.85. The benchmark Sensex index declined 0.43%.