Taro Pharma December Quarter Net Profit Down 26% At $139.8 Million
Taro Pharma contributes nearly 20% to Sun Pharma’s revenues.
Taro Pharmaceutical Industries Ltd., the U.S.-based subsidiary of drugmaker Sun Pharmaceutical Industries Ltd., reported a 14.7 percent drop year-on-year in net sales at $220.4 million for the October-December quarter, the lowest in at least past five quarters.
The company’s net profit fell 26 percent to $139.8 million from $189.0 million in the same quarter last year, according to a release by Taro Pharma.
The decline came despite 1 percent volume growth during the quarter, as continued rise in competition and the challenging pricing environment continued to hurt Taro’s portfolio. Credit Suisse had estimated the company’s net sales at $222 million, while Kotak Institutional Equities had pegged the number at $225 million. In the July-September quarter, Taro Pharma’s net sales stood at $230 million.
Taro Pharma contributes nearly 20 percent to Sun Pharma’s consolidated revenues and about 45-50 percent to net profit. Sun Pharma will announce its third quarter results on Tuesday.
Analysts had expected a weaker quarter for the drugmaker due to pricing pressure at Taro Pharma’s base portfolio and additional competition for NT (Nystatin-Triam ) anti-fungal cream.
Operating income fell 25.6 percent to $129 million, compared to the same quarter last year. The benefit of lower selling, marketing, general and administrative (SG&A) expenses aided by reduced marketing spend related to making a new drug Keveyis used for muscle pain, was more than offset by a 700 basis points contraction in the gross margin to 75.9 percent.
The company continues to face challenging headwinds given an increasingly competitive environment, highlighted by new entrants to the base business and pressure from buyer consolidations, said Abhay Gandhi, Taro Pharma’s interim chief executive officer in the earnings release.
While these factors are impacting the generic sector as a whole, and not unique to Taro, we believe we are well positioned in the market. We continue to invest in R&D to nurture our pipeline as we consistently look for ways to generate value from our product portfolio. I am encouraged by the continuing increase in generic volumes that we are experiencing throughout the year.Abhay Gandhi, Interim CEO, Taro Pharma
On November 23, 2016, Taro Pharma had announced that its Board of Directors approved a new $250-million share repurchase of ordinary shares. The company has so far bought back 4,67,815 shares at an average price of $104.40 per share.