Sun Profit Jumps 57% on Healthy Sales Show

The Economic Times - - Companies - OUR BUREAU

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

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