Sun Pharmaceutical Industries, India's largest drug firm in terms of market capitalization, posted a 11.49 dip in net profit during the quarter ended September, compared to the same period last year, due to regulatory issues and the resultant loss of revenue for its US subsidiary Caraco Pharmaceuticals.
Sun posted a net profit of Rs 453.81 crore during the quarter against Rs 512.77 crore in the corresponding quarter last year as per the consolidated results of the company announced today.
Consolidated income showed almost flat growth — Rs1,185.17 crore against Rs1,177.84 crore in the corresponding quarter of last year.
These numbers bettered the analyst expectations of net profit of Rs 315-325 crore on a turnover of about Rs935-950 crore.
Analysts said despite regulatory issues in the US for its subsidiary Caraco, growth in domestic business and Caraco's better sales than the immediate previous quarter and patent settlement with Forest Laboratories during the quarter helped the company post better than expected profits.
Caraco had recently announced second quarter sales of $78 million (Rs 368.7 crore), up 63 per cent from the immediate preceding quarter and with a net profit of $6.7 million (Rs31.6 crore). In the corresponding quarter of last year, Caraco had net sales of $122 million with $8.6 million net profit.
In June 2009, US marshals had raided Caraco's manufacturing facilities in Michigan at Detroit, Farmington Hills, and Wixom. Up to 33 different drugs were seized by the US marshals and the FDA banned Caraco from manufacturing and selling of these drugs in the US, until there is assurance that the firm complies with manufacturing standards. The action was following Caraco's continued failure to meet the FDA's current good manufacturing practices (cGMP) requirements.
“Performance across all business segments remains in line with our expectations, as borne out by the financials. We expect the core business momentum around growing profitably as well as developing, registering and launching new products to remain intact,” said Dilip Shanghvi, chairman and managing director, Sun Pharma.
It also had settled a patent litigation with Forest Laboratories on anti depressant drug Lexapro, which fetched about $20 million (Rs 94.5 crore).
Gastro-intestinal drug Protonix's generic (pantoprazole), launched at-risk with the patent litigation pending, continues to be sold in the US, said Sun Pharma. The drug has limited competition in the US market, said analysts.
Sun Pharma's exports during the quarter were lower by 2.43 per cent at Rs 709.68 crore, compared to the previous year corresponding quarter.
India branded generic sales for the quarter were at Rs 471 crore, registering a growth of 5 per cent over same quarter last year and an increase of 51 per cent compared to the immediate preceding quarter. Domestic business contributed 39 per cent of total sales during the quarter.
"Sun Pharma's domestic business has come back to normalcy and has been growing consistently in the last four quarters," said Ranjit Kapadia, vice president, institutional research with HDFC Securities.
International active pharmaceutical ingredient (API) sales also grew by 15 per cent over corresponding quarter last year.
Between Sun Pharma and Caraco, marketing applications (ANDA) for 79 products are now approved. In the second quarter, ANDAs for 3 products have been filed between Sun Pharma and Caraco. During the second quarter, ANDAs for 6 products from Sun Pharma have been approved. In total, 108 products now await US drug regulator's approval, including 10 tentative approvals, said a press release.
Caraco has signed a consent decree with the USFDA, offering clarity on the path it pursues to resolve the current good manufacturing practice (cGMP) issues that resulted in seizure of drugs in June 2009, said Sun Pharma.
