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