Biggest Indian Drugmaker’s Profit Surprises as Top Markets Grow
(Bloomberg) -- India’s biggest drugmaker Sun Pharmaceutical Industries Ltd. recovered from a surprise quarterly loss last year and swung back into profit as it saw a robust sales jump in its U.S. and local businesses -- two markets that contribute the bulk of its revenue.
The firm headed by billionaire Dilip Shanghvi posted a net income of 14.4 billion rupees ($193.7 million) for the quarter ended June 30 compared to an average profit estimate of 14.13 billion rupees based on a Bloomberg survey of analysts. Revenue rose 28% to 97.2 billion rupees, according to an exchange filing Friday. It also took a much smaller one-time charge of 6.31 billion rupees in the latest quarter.
The resilience of Sun’s earnings despite the company having little exposure to Covid-related treatments during the pandemic reflects its bet on specialty drugs in the U.S paying off. The Mumbai-based company has a portfolio spanning dermatology, ophthalmology and oncology in its top market outside India.
“We witnessed a strong Q1, driven by a combination of robust core business growth, low base and some sale of Covid products,” said Shanghvi, Sun’s managing director. “We are enthused by the all-round growth across all our businesses.”
India sales came in at about 33 billion rupees, up 39% compared to the same quarter last year while the U.S. finished dosage sales rose 35% to $380 million, Sun said in a statement. Sales in other geographies also jumped significantly. The drugmaker also repaid debt of about $185 million in the June quarter.
Shares advanced 10.1% in Mumbai after earnings on Friday, the most since April last year, boosting its 2021 rise to almost 31%. Benchmark S&P BSE Sensex fell 0.1% on the day.
As the U.S. started reopening in the June quarter after curbing its coronavirus outbreak, India was hit by a deadly second wave starting March. Last month, Sun said it was collaborating with a number of others on a clinical trial in India of the anti-viral drug Molnupiravir for the treatment of mild Covid.
While the drugmaker hasn’t covered the coronavirus treatment market, their “outperformance through Covid and supply disruption is testimony to Sun’s brand equity and distribution muscle in the market,” AllianceBernstein analysts Nithya Balasubramanian and Praveen Shreenivas wrote in a report last week. “In the short-term we expect growth will be aided by post Covid demand recovery especially in acute therapies where Sun has meaningful exposure.”
However, Sun’s earnings have been hit recently with multiple legal charges in the U.S. and Europe. The firm took a one-time charge related to antitrust probes in the previous quarter. Last year, it reported a surprise first quarter loss as it set aside nearly $480 million to settle drug price-fixing allegations in the U.S.
Its U.S.-listed subsidiary, Taro Pharmaceutical Industries Ltd., continues to face some headwinds. Taro’s reported net loss for the latest quarter was at $18.8 million.
“It has provided $60 million for an additional legal contingency provision related to ongoing multi-jurisdiction civil antitrust matters,” Sun said in the statement.
The company also resolved a patent litigation with Bristol Myers Squibb unit Celgene Corp. in June, which gave Sun a license to manufacture and sell a limited quantity of the generic cancer drug lenalidomide in the U.S. after March 2022.
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