Caraco Pharmaceutical Laboratories Ltd, a Detroit-based subsidiary of Sun Pharmaceuticals Ltd, has improved its net sales by 38 per cent to $28.4 million during the first half ended June 2004 from $20.6 million in the corresponding period of last year. The gross profit moved up by 44 per cent to $17.3 million from $12.0 million. Gross profit as a percentage of net sales improved marginally, to 61 per cent from 58 per cent in the corresponding period of 2003.
Jitendra N Doshi, CEO said, "We incurred substantially higher total R&D expense for during the first half of current year as three products were successfully transferred from Sun Global under the R&D agreement."
Total R&D expenses for the period were $15.0 million, of which non-cash R&D expense was $12.5 million. This was considerably higher than $1.5 million and zero, respectively, for the corresponding period in 2003. This resulted in a net loss of $0.7 million or $(0.03) per diluted share for H1-2004, compared to a net income of $6.5 million, or $0.26 per diluted share for H1-2003.
He continued, "However, net cash generated from operations, which stood at $15.5 million for the full year of 2003 and $8.8 million for H1-2004, helped us to repay long-term loans, fund our expansion activities and augment working capital. During the six months, we utilized the cash accruals to repay the ICICI Bank loan of $4.4 million and the EDC loan of $6.4 million, make a scheduled repayment of $3.1 million to Bank of Nova Scotia and invest $2.5 million in facility upgrades. This was after available cash of $3.5 million and $1.5 million, utilized for increase in inventories and receivables, respectively."
Doshi added, "We expect the healthy increase in sales and cash flow during the first half of 2004 to continue through the remainder of the year. However, pricing pressures, due to increased competition, which resulted in lower gross margins in the fourth quarter of 2003, are expected to remain in 2004. Nevertheless we are optimistic about achieving our previously stated guidance of 20-25 per cent revenue growth for 2004."
"We continue to work aggressively to build our pipeline of products for our future growth. We have selected a total of 15 products out of 25, including 8 selected during Q2-2004, under the products agreement with Sun Global. These are at various stages of development. Of these 15 products, four have passed bio-equivalency studies.
The company has filed three ANDAs during H1-2004 and to date, four products are pending approval with the FDA. They are planning to file six or seven ANDAs with the FDA in 2004, including the three already filed in H1-2004.