Sun Pharma Q2 profit rises to Rs2,235 crore, beats estimates

Net sales rose 13.2% to Rs7,764.03 crore, while total expenditure increased just 2.7% to Rs5,401.26 crore during the quarter


Photo: Hemant Mishra/Mint
Photo: Hemant Mishra/Mint

Mumbai: Sun Pharmaceutical Industries Ltd’s fiscal second-quarter profit more than doubled as the company received $45 million in milestone payments from a partner.

Net profit of India’s largest drug maker rose to Rs2,235.14 crore in the three months to September from Rs1,028.82 crore a year ago.

Net sales rose 13.2% to Rs7,764.03 crore, while total expenditure increased just 2.7% to Rs5,401.26 crore during the quarter. Operating margin widened to 34.4% in the September quarter from 28% in the year earlier.

“The synergies from the Ranbaxy acquisition are gaining momentum and we are on track to achieve the targeted benefits. These synergies will continue to help in funding our emerging specialty businesses,” Dilip Shanghvi, managing director of the company, was cited as saying in a press release.

Other operating income jumped to Rs501.09 crore from Rs15.13 crore a year ago as the company received $45 million in milestone payments from Almirall SA as part of the licensing agreement for the development and commercialization of tildrakizumab for psoriasis in Europe.

The company also had non-recurring sales of pharmaceutical products of $25 million during the quarter.

Formulation sales in the US, the company’s biggest market, rose 9% to $555 million from a year ago. US sales benefited from the 180-day exclusivity the company received for sale of the generic version of cancer drug Gleevec which lasted till July 2016, the company said. Sun Pharma received six product approvals in the US during the quarter.

As pricing pressure in the US continues, the company is banking on its specialty products and complex generics’ pipeline as well as resolution of regulatory issues at its manufacturing unit at Halol in Gujarat for growth in the market going forward.

Sun Pharma’s Halol unit had received warning letter from the US Food and Drug Administration (US FDA) last December for violations of good manufacturing practices (CGMP).

“We have already requested the US FDA for a re-inspection of our Halol facility. We hope it gets cleared within next five months but that is up to the FDA and I cannot give a timeline,” Shanghvi said in a conference call with analysts.

Domestic sales grew 11% from a year earlier to Rs2,009 crore, while sales in emerging markets rose 22% to $170 million.

A sharp decline in interest cost to Rs53.72 crore from Rs158.18 crore last year also boosted profitability in the September quarter.

The company’s spending on research and development (R&D) was Rs570 crore, or 7.3% of sales, as against Rs498 crore, which was again 7.3% of sales, a year ago.

Sun Pharma has a comprehensive product offering in the US market consisting of 423 approved drugs and filings for 144 abbreviated new drug applications (ANDAs) with the US FDA. Additionally, the pipeline includes 37 approved new drug applications (NDAs) and filings of four NDAs with the US FDA.

The company has maintained its guidance of 8-10% growth in revenue and R&D spending at 9% of sales in 2016-17.

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