Sun Pharmaceutical Industries, a Rs.27,200 crore plus pharma leader in India, has suffered setback during the first quarter ended June 2015 on account of integration of Ranbaxy Laboratories (RLL) and flat growth in sales. Its consolidated net profit declined sharply by 60.2 per cent to Rs.479 crore from Rs.1,205 crore in the corresponding period of last year.
The company provided Rs.685 crore as exceptional item arising from charge of impairment of fixed assets and other related costs and write down of the carrying value of goodwill on consolidation of RLL. Its consolidated net sales improved only by 3.3 per cent to Rs.6,522 crore from Rs.6,313 crore.
Its other operating income went up to Rs.235 crore from Rs.28 crore in the similar quarter of last year and its other income declined to Rs.105 crore from Rs.182 crore. Employees cost increased by 12 per cent to Rs.1,227 crore from Rs.1,096 crore. EBDITA declined by 7.8 per cent to Rs.1,955 crore from Rs.2,120 crore.
The board of directors has declared equity dividend of 300 per cent (Rs.3 per share of Rs.1 each) for the year 2014-15. Despite lower profit, Sun Pharma shares opened higher at Rs.844 on BSE today and reached at inter-day high at Rs.884.90 in the morning session.
Dilip Shanghvi, managing director said, “Our performance for the quarter has been impacted by certain one-time and exceptional charges which will drive synergies and overall profitability improvement in the long-term. Nonetheless, we continue to invest significantly in R&D and in building critical talent for enhancing our specialty and complex generics pipeline. As a part of this initiative, we have strengthened our ophthalmology and OTC teams in the US as well as formed a dedicated team for MK-3222, our IL-23 anti-body which is currently undergoing phase-III clinical trials.”
The company's branded generic sales in India improved by 11 per cent to Rs.1,784 crore and worked out to 27 per cent of total sales. US finished dosage sales declined by 4 per cent to US$ 488 million and that in emerging markets declined by 15 per cent to $133 million. Its sales in rest of the world (ROW) also declined by 7 per cent to $91 million. The US sales contributed 47 per cent to its total sales. Its US sales impacted due to competition and temporary supply constraints arising from remediation efforts at the Halol facility. The volatile currency movements put pressure on sales in emerging markets. The company has taken conscious decision to reduce the participation in non-remunerative businesses. ROW market accounted for approximately 9 per cent of revenues. Its external sales of API improved by 32 per cent.
The company's investment in R&D reached at Rs.511 crore, or 7.8 per cent of sales. This includes significant investments on account of funding the clinical development of MK-3222, the IL-23 monoclonal anti-body in-licensed from MSD (US). The company has total 442 ANDAs approvals and 159 ANDAs awaiting US FDA approval. It filed 6 ANDAs during the first quarter ended June 2015 and received approval for 4 ANDAs.
Sun Pharma has also suffered heavy setback on standalone basis. Its standalone net sales declined sharply by 30.5 per cent to Rs.1,871 crore from Rs.2,690 crore in the similar quarter of last year. Further, it incurred heavy net loss of Rs.387 crore as against a net profit of Rs.803 crore. Its incurred a net loss before depreciation, interest and tax of Rs.72 crore as against a profit of Rs.1,086 crore.
The company has 23 direct subsidiaries and 82 step down subsidiaries. There are 3 jointly controlled entities viz., MSD-Sun LLC., S&I Ophthalmic LLC and Artes Biotechnology Gmbh. There is one partnership firm Solrex Pharmaceuticals Company and on subsidiary of jointly controlled entity called MSD- Sun FZ LLC.