The operating margin of Sun Pharmaceutical Industries Ltd has been considerably affected by loss of revenues on Caraco manufactured products compounded by additional costs related to inventory reserve as well as all costs of regaining FDA compliance. The operating margin is at 32 per cent compared to 43 per cent in FY09.
The high margin achieved last year was largely on account of significant non-recurring sale and profit from products enjoying limited competition in the US.
However, the sales of branded prescription formulations in India were at Rs 514 crore for the fourth quarter. This is equivalent to a growth of 14 per cent over the fourth quarter last year, excluding the one-time element in Q4 FY09.
Making a similar adjustment for the full year numbers, domestic formulation sales at Rs 1830 crore , a growth of 15 per cent over earlier year post adjustment for the one-time sale in the last year. Its international branded generic sales have grown by 21 per cent over Q4 FY09
Sun Pharma holds 3.7 per cent market share in the highly competitive pharma market, as per latest IMS ORG report. Overall, the company is ranked no. 1 based on share of prescriptions with five classes of specialists: psychiatrists, neurologists, cardiologists, ophthalmologists and orthopedics.11 key products were launched during the quarter, taking the total to 49 during this year.
The highlights of Q4 FY10 consolidated financials included net sales at Rs 1109 crore,operating margin at 33 per cent compared to 30 per cent in Q4 FY09 and net profit at Rs 394 crore, equivalent to 36 per cent margin.
According to Dilip Shanghvi, CMD of the company, “Branded prescription products business in India and international markets continues to grow consistently. Continuing R&D investments in expanding the pipeline and presence across markets, including the US, coupled with efforts at Caraco to remedy the FDA issues, should continue to drive business growth over the coming years.”
Caraco has received an approval for a work plan submitted to the US FDA covering remedial actions that would lead to resuming manufacturing at its Michigan facilities. Reflecting the continued impact of cessation of manufacturing activity after the FDA action, Caraco had recently announced Q3 FY10 sales of $55 million, up 8 per cent from the corresponding quarter last year. Caraco recorded a net loss of $3 million for Q4 FY10. For the fully year, Caraco reported sales of $234 million and net loss of $9 million.
Further shipments of Pantoprazole generic have been stopped. Between Sun Pharma and Caraco, ANDAs for 84 products are now approved. In the fourth quarter, ANDAs for 15 products have been filed by Sun Pharma. With this, ANDAs for a total of 30 products have been filed during the year.
Counting this and the approval received in the fourth quarter, ANDAs for 123 products now await US FDA approval, including 12 tentative approvals. This pipeline is expected to build revenues for our US generic business in the years ahead. Consolidated R&D expense for Q4 of FY10 is Rs 56 crore, or 5 per cent of sales. For the entire year, consolidated R&D expense is Rs 247 crore, equivalent to 6 per cent of sales.
A cumulative of 155 DMF / CEP applications have been made, with 89 approved so far. The total number of patent applications submitted now stands at 246 with 81 patents granted so far.