Bangalore: Sun Pharmaceutical Industries Ltd posted a sharp plunge in quarterly net profit on Wednesday, weighed down by the recent seizure of its unit’s medicines by the US health regulator on manufacturing violations.
However, rival drugmaker Cipla Ltd posted a 73% jump in April-June net profit, boosted by a rise in export earnings and lower foreign exchange losses in the quarter as compared to a year-ago period.
Last month, US authorities seized all medicines produced by generic drugmaker Caraco Pharmaceutical Laboratories, a unit of Sun Pharma, at Michigan facilities following, what health officials said, repeated violations of manufacturing standards.
The drugs included generic versions of heart, pain and psychiatric medicines.
“The regulatory setback at Caraco, resulting in seizure of products, does pose a serious hurdle to our business on the path to replicating our past success,” Sun Pharma’s chairman and managing director, Dilip Shanghvi, said in a statement. The Sun Pharma statement said Caraco continued to work closely with the US Food and Drug Administration (FDA) to address the issue, but a company spokesman declined to give details.
Global demand for generic drugs from Sun Pharma and rivals such as Dr Reddy’s Laboratories and Ranbaxy Laboratories is booming as nations around the world battle rising healthcare costs.
But export-driven Indian companies are facing stiff pricing pressure as more drug makers jump into the generics market. Increased scrutiny of manufacturing standards by overseas regulators is also a worry as it could delay new launches.
In February, the FDA said that Ranbaxy had sold misbranded or adulterated drugs in the United States, the company’s largest market, having earlier banned imports of more than 30 of the company’s generic drugs.
Sun net down, Cipla surges
Sun Pharma, India’s largest drugmaker by market value, said net profit in April-June, its fiscal first quarter, fell more than forecast to Rs1.64 billion ($34 million), compared with Rs5.01 billion in the same period a year ago. Net sales dropped 24% to Rs7.88 billion, dragged by a 56% decline in sales of its US unit, Caraco, following the regulatory action.
A Reuters poll of 10 analysts had forecast net profit to fall to Rs3.77 billion on revenue of Rs10.02 billion.
Mumbai-based Sun Pharma sells copycat versions of drugs such as Paraplatin -- which is indicated for the treatment of ovarian cancer -- and Xanodyne Pharmaceuticals’ painkiller Roxicodone tablets. Cipla’s June quarter net profit rose to Rs2.42 billion, from Rs1.40 billion reported a year earlier. A Reuters poll of 10 analysts had expected a net profit of Rs2.51 billion.
Cipla said its board had approved the proposal to raise up to Rs15 billion by issue of securities in the domestic or international market.
Shares in Sun Pharma, which the market values at $5.4 billion, fell 5.2% to Rs1,188.25 and Cipla closed down 2.8% at Rs274.95 in the Mumbai market.