Sun Pharma posts surprise loss led by one-time charge
MUMBAI: Sun Pharmaceutical Industries Ltd, India’s largest drugmaker, slipped into a surprise quarterly loss because of a one-time charge amid price pressures in its US generics business.
Mumbai-based Sun Pharma posted a loss of ₹2,277 crore ($293.6 million) for the quarter ended March 31, compared to the average ₹1,707 crore profit estimated by analysts in a Bloomberg survey. The drugmaker’s earnings included an exceptional loss of ₹3,936 crore.
Revenue also came below expectations to ₹9,450 crore, according to an exchange filing Monday. Costs rose 9.1% to ₹7,700 crore compared with the same quarter last year.
While the years-long strategy by Sun Pharma’s billionaire owner Dilip Shanghvi to develop high-margin, patented drugs treating chronic ailments has pleased investors, the company is facing multiple headwinds now. There has been a sectorwide generic drug price erosion in the US, Sun’s largest overseas market, with industry giant Teva Pharmaceutical Industries Ltd cutting sales guidance. The US drug regulator is also scrutinizing one of Sun Pharma’s local factories.
“Sun Pharma has seen lackluster growth in their US generics portfolio because of higher pricing deflation on their base and slowing rate of new launches,” Nithya Balasubramanian, health care analyst at Bernstein India, wrote in a report on Sun Pharma earlier this month.
The drugmaker is also contending with global inflationary turmoil that have boosted costs of raw materials nearly everything including medicines, as well as more localized problems at one of its factories in Halol, Gujarat in western India.
A US Food and Drug Administration (FDA) inspection of Sun Pharma’s factory in Halol, Gujarat, found 10 manufacturing issues earlier this month. Sun Pharma has said it is preparing the response to the FDA’s observations as the drugmaker seeks to avoid more serious consequences, including a ban on exports to the US from the plant.
The Halol plant has had a run in with the FDA when the regulator slapped it with a US export ban in 2015 that was lifted more than two years later.
However, the drugmaker had a recent boost when two of its non-patented drugs were approved in the US. Its share price has gained 5% this year while India’s benchmark S&P BSE Sensex has declined 4% in 2022.