Biggest Indian Drugmaker’s Profit Falls 37% on Legal Charges

(Bloomberg) -- Sun Pharmaceutical Industries Ltd. saw profit slip 37%, hit by a one-time loss over a legal settlement as India’s largest drug maker braced for the impact of the coronavirus pandemic on its business globally.

The Mumbai-based drugmaker reported a net income of 4 billion rupees ($53 million) for the quarter ended March, the company said in an exchange filing, compared to the 10.02 billion-rupee forecast in a Bloomberg survey of analysts. Revenue, at 81.8 billion rupees, rose from the year-ago quarter and slightly exceeded analysts estimates. It also took a one-time loss of 2.61 billion rupees to settle antitrust litigation, as well as other legal provisions.

Sun Pharma’s shares fell 1.8% to close at 450.9 rupees, paring the gains this year to 4.2%. Benchmark S&P BSE Sensex gained 3.3% on Wednesday.

The legal charges neutralized the boost for drugmakers such as Sun after lockdowns imposed by countries triggered panic buying by pharmacists and patients. The focus on curbing the coronavirus pandemic over the past few months has also forced hospitals to delay non-essential services and surgeries, creating a drag on sales of other medicines.

Softening Sales

Sales at the company founded by billionaire Dilip Shanghvi rose 8% in the last quarter in India and other emerging markets but fell 15% in its biggest and most profitable market, the U.S., according to a company statement. U.S. sales a year ago benefited from a one-time gain.

“We do estimate some softening of sales in the near term due to the lockdown and stocking up by customers, although it is difficult to quantify the impact as of now,” Sun said in the statement.

The company meanwhile started gaining market share in India in the last quarter and intends to build on that.

“Our endeavor will be to gain market share in each of our businesses by doing better, despite the near term uncertainties related to Covid-19,” Shanghvi said in the statement. “I am happy to see that we are able to maintain business continuity in these challenging times, so that patients continue to get access to their much needed medications.”

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