Sun Pharma Q2 net up 13% at Rs 2,047 cr, firm launches 28 products in qtr

Taro-adjusted net profit down by 45% YoY

Strong sales growth in domestic branded formulations and US markets has led to India's largest drugmaker Sun Pharmaceutical Industries Limited reporting a net profit of Rs 2,047 crore in the second quarter of FY22.

The net profit for Q2FY22 was up 29 per cent over the adjusted net profit of Q2 last year and up 13 per cent versus reported net profit year-on-year (YoY), the company informed exchanges in its filings on Tuesday. The company's earnings before interest, tax, depreciation and amortisation (EBITDA) at Rs 2,560.8 crore, up by 21 per cent over Q2 last year, with resulting EBITDA margin of 26.8 per cent compared to 25 per cent for Q2 last year.

Consolidated sales from operations rose by 13 per cent YoY but fell marginally by one per cent on a sequential basis to Rs 9,556.7 crore.

Domestic business, which accounted for 33 per cent of total sales, rose by 26 per cent YoY to Rs 3187.8 crore. US sales, which form 28 per cent of total sales, grew by 8 per cent YoY to $361 million, dragged by Taro's performance. Taro saw its Q2 sales in FY 2021-22 fall by eight per cent YoY to US$ 132 million, while its adjusted net profit fell by 45 per cent over Q2 last year to about $25 million.

The company launched 28 new products in the domestic market in Q2, the management said in its post earnings call on Tuesday. On the other hand, Covid product sales fell from 8-10 per cent in Q1 to two per cent in Q2 of the current fiscal year.

Continuing on the downward trend of the first quarter, Sun Pharma's active pharmaceutical ingredients (API) external sales fell by 15 per cent to Rs 435.8 crore in the second quarter. The sales growth mainly fell on account of lower opiates sales. The company, however, stated that it continues to focus on increasing API supplies for captive consumption relating to its key products, since the API business imparts benefits of vertical integration and continuity of supply chain for its own formulations business.

Commenting on the performance, Sun Pharma's Managing Director Dilip Shanghvi said that the company's global specialty business has grown by 43 per cent over Q2 last year even as its plaque psoriasis drug Ilumya grew both YoY and sequentially. "We remain steadfast in our focus on growing our overall business and simultaneously strengthening our global specialty portfolio. The recent launch of Winlevi in the US and Ilumya in Canada is a step forward in this direction," said Shanghvi.

The management said that the company was in touch with the USFDA, requesting the regulator to audit its Halol facility at the earliest, although it hasn't received any intimation from the regulator.

Among other markets, Sun Pharma's emerging markets' sales grew by 16 per cent YoY to $243 million for Q2, accounting for about 19 per cent of total sales. Formulation sales in Rest of World (ROW) markets, excluding US and emerging markets, was up by about five per cent to $188 million over last year's Q2, accounting for 15 per cent of sales.

In the first half of the current financial year 2021-22, the company has repaid debt of about US$ 209 million compared to the debt as of March 31, 2021. With this debt repayment, Sun Pharma had a net cash of about US$ 200 million as of September 30, 2021, on an ex-Taro basis.

Sun Pharma, however, reduced its consolidated research and development (R&D) investment to Rs 536.4 crore in Q2 of FY'22, compared to Rs 612.7 crore in Q2 last year, on account of spill-over of certain clinical studies into subsequent quarters.

The company's R&D efforts span across both specialty and generic businesses even as it continues to invest in building the pipeline for various markets including the US, emerging markets, RoW markets and for India.

Currently, the company's product offering in the US market comprises approved abbreviated new drug applications (ANDAs) for 508 products while filings for 88 ANDAs await US FDA approval, including 20 tentative approvals. During the second quarter, three approvals were received. Additionally, the portfolio includes 53 approved new drug applications (NDAs) while 13 NDAs await US FDA approval.