Sun Pharma rev­enue falls for third straight quar­ter, net profit dips 59%

Financial Chronicle - - COMPANIES -

SUN Phar­ma­ceu­ti­cal In­dus­tries rev­enue fell for a third straight quar­ter, in­creas­ing pres­sure on In­dia’s largest drug­maker to re­solve man­u­fac­tur­ing de­fi­cien­cies at a key plant that has ham­pered new prod­uct in­tro­duc­tions in the US for al­most two years.

Rev­enue de­clined to Rs 6,600 crore ($1 bil­lion) in the quar­ter ended Sept. 30, the Mum­bai-based com­pany said in a fil­ing on Tues­day. That com­pares with a Rs 6,800 crore av­er­age of 23 an­a­lysts es­ti­mates com­piled by Bloomberg.

Net in­come dropped to Rs 912 crore, ex­ceed­ing the an­a­lysts es­ti­mates for Rs 800 crore.

A con­sol­i­da­tion among phar­ma­cies and in­ten­si­fy­ing com­pe­ti­tion have sent prices for generic drugs in the US, the world’s largest mar­ket for medicines, into a tail­spin and has left the global in­dus­try scram­bling to ad­just. Sun Pharma, which gets about half its rev­enue from the US, is par­tic­u­larly ex­posed be­cause its abil­ity to off­set fall­ing prices with new prod­ucts is ham­pered by a Food and Drug Ad­min­is­tra­tion sanc­tion over man­u­fac­tur­ing de­fi­cien­cies at its plant at Halol in western In­dia.

De­spite costly re­me­di­a­tion ef­forts the com­pany has been un­able to shake off the sanc­tion since 2015.

“There is a sig­nif­i­cant amount of ero­sion hap­pen­ing in the US,” Amey Chalke, an an­a­lyst at HDFC Se­cu­ri­ties, said in a phone in­ter­view be­fore the re­sults were re­leased.

“If Halol comes back then the US would get sta­bilised for the next two years with the ap­provals com­ing in.”

Shares of Sun Pharma have de­clined 17 per cent this year, com­pared with the 24 per cent gain in the bench­mark Sen­sex.

My­lan NV, which posted quar­terly earn­ings that missed an­a­lysts ex­pec­ta­tions, said prices of generic drugs in North Amer­ica were fall­ing at an even faster rate than in pre­vi­ous quar­ters. Is­raeli drug­maker Teva Phar­ma­ceu­ti­cal In­dus­tries re­ported sim­i­lar re­sults ear­lier this month.

PTI adds: Sun Phar­ma­ceu­ti­cal In­dus­tries MD Dilip Shanghvi said: "A chal­leng­ing US generic pric­ing en­vi­ron­ment cou­pled with con­tin­ued in­vest­ments in build­ing our global spe­cial­ity busi­ness has im­pacted our Q2 per­for­mance."

The com­pany ex­pects the per­for­mance to grad­u­ally im­prove in the sec­ond half of this year, he said.

Sale of branded for­mu­la­tions in In­dia for the sec­ond quar­ter of fi­nan­cial year 2017-18 stood at Rs 2,221 crore, up 11 per cent, and ac­count­ing for 34 per cent of the to­tal sales, Sun Pharma said.

Sales in the US stood at $309 mil­lion for the quar­ter, a de-growth of 44 per cent over same pe­riod last year and ac­counted for 30 per cent of the to­tal sales, it added. In the emerg­ing mar­kets, the sales were at $196 mil­lion, a growth of 16 per cent.

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