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Sun Pharma posts 1,656 cr Q1 loss on legal woes in US

Despite challenging conditions, the company has done well and not lost market share for any of its key specialty products in the US and has maintained market share in India, said Sun Pharma MD Dilip Shanghvi. (MINT)Premium
Despite challenging conditions, the company has done well and not lost market share for any of its key specialty products in the US and has maintained market share in India, said Sun Pharma MD Dilip Shanghvi. (MINT)

  • The loss was caused by a one-time settlement in a price-fixing case involving Taro
  • Taro, a Sun Pharma subsidiary, reported settlements and loss contingencies of $478.9 million

Sun Pharmaceutical Industries Ltd posted a consolidated net loss of 1,655.6 crore in the June quarter, primarily dragged by a one-time settlement in a drug price-fixing case in the US by its subsidiary Taro Pharmaceutical Industries Ltd. In the year-ago quarter, India’s largest drugmaker had posted a profit of 1,387.5 crore.

“Taro reported settlements and loss contingencies of $478.9 million (about 3,178 crore), which reflect the one-time settlement charge of $418.9 million related to the global resolution of the Department of Justice investigations into the US generic pharmaceutical industry," the company said on Friday.

The subsidiary made an additional provision of $60 million, or about 455.2 crore, for the ongoing multi-jurisdiction civil antitrust matter. While the losses were primarily due to an overall one-time charge of 3,633 crore, Sun Pharma also had a poor quarter as the covid-led global lockdown across markets led to tepid sales, especially in the US market.

The Dilip Shanghvi-led pharmaceutical company clocked 7,467 crore in consolidated sales from operations, down 9.6% year-on-year. “The Q1 performance reflects the impact of the global covid-19 pandemic and consequent lockdown across markets and is not an indicator of the underlying strength of our business. Despite challenging conditions, we have done well and have not lost market share for any of our key specialty products in the US. We have also maintained our market share in the Indian domestic market," said Shanghvi, who is the managing director of the company.

Formulation sales in the US were down by a third to $282 million. Sun Pharma’s sales in emerging markets, as well as the rest of the world, were also lower on account of the pandemic. However, the Indian market, accounting for 32% of sales, grew 3% to 2,388 crore.

Globally, lockdowns related to the covid-19 pandemic have caused significant disruptions across industries, including the healthcare and pharma sectors. As many elective surgeries were postponed and hospital out-patient departments and clinics were shut, doctors’ prescriptions witnessed a drop. This reflected in the financial performance of many pharmaceutical companies, including Sun Pharma.

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