Sun Profit Jumps 57% on Healthy Sales Show
Sun Pharmaceutical, which is in the process of acquiring rival drug maker Ranbaxy, posted a better-than-expected 57% jump in its Q4 net profit, as sales continued to grow at a healthy pace in the key US market and at home in India. The company reported a net profit of .` 1,587 crore for the January-March period, compared with .` 1,012 crore a year earlier and average analyst estimate of .` 1,418 crore. Consolidated net sales rose 32% to .` 4,044 crore. The company forecasts its revenue to grow 13-15% in the current fiscal that began on April 1. Its research and development (R&D) spending would be 6-8% of the revenue, and capital expenditure .` 900 crore during the year when it targets as many as 25 new drug filings, Sun Pharma said. The guidance doesn’t take into account the impact of Ranbaxy acquisition. The projected growth is far slower than in fiscal 2014, when consolidated net sales rose as much as 42% to .` 16,004 crore. A news release from the company cited a high base because of this year’s strong performance and “risks associated with increase in competition” for the conservative projection, but didn’t provide further explanations. In March, Sun Pharma announced the acquisition of Ranbaxy for $3.2 billion in stock, a deal that when completed would make it the fifth largest generic drug maker in the world. The acquisition hasn’t yet received approval from regulatory agencies. “This highly complementary combination will lead to significant value creation opportunities and wealth for shareholders, driven by the strong positioning that the merged entity will enjoy in the US, India and emerging markets,” the news release said. MD Dilip Shanghvi said the company continues to look at opportunities to grow, indicating that it may still be looking out for acquisitions. The combined entity’s revenue is estimated at $4.2 billion for calendar year 2013 and earnings before interest tax and depreciation $1.2 billion. Sun Pharma expects the merged entity to be able to generate synergy benefits of about $250 million by the third year post closure of the deal. “These would be driven mainly by a combination of revenue, procurement and supply-chain synergies” it said. Referring to financial performance, Shanghvi said it reflected “the focus on execution of our strategy” and that it is “developing a differentiated and specialty business and continue to evaluate opportunities to enhance our global presence.” The US business, which contributes more than half of the company’s overall revenue, grew 22% to $403 million (.`2,486 crore) in Q4. In India, sales rose 21% to .` 947 crore.
The company forecasts its revenue to grow 13-15% in the current fiscal that began on April 1