Q2 Results: Sun Pharma Profit Meets Estimates As U.S. Sales Remain Stable
The drugmaker posted a net profit of Rs 1,064 crore compared with a net loss of Rs 270 crore a year ago.
Sun Pharmaceutical Industries Ltd. reported a profit in the quarter ended September, matching analysts’ expectations.
The company posted a net profit of Rs 1,064 crore in the three-month period compared with a net loss of Rs 270 crore a year ago, India’s largest drugmaker said in an exchange filing. That compares with the Rs 1,074-crore profit consensus estimate of analysts polled by Bloomberg. Sun Pharma had posted a one-time loss of Rs 1,217 crore for a settlement amount payable in an antitrust litigation related to sleep disorder drug modafinil a year ago.
Revenue rose 17.1 percent year-on-year to Rs 8,123.4 crore—in line with the Rs 8,083 crore estimated by analysts. That was partly on the back of its acquisition of Japan’s Pola Pharma, effective in January. Domestic sales grew 35 percent year-on-year to Rs 2,515 crore.
Operating income rose 16.7 percent to Rs 1,789.8 crore, while operating margin remained unchanged at 22 percent. The drugmaker spent Rs 488 crore, or 6.1 percent of its sales, on research and development in the three-month period compared with Rs 452 crore—6.6 percent of sales—a year ago.
“The numbers are in line with expectations,” Sapna Jhawar, senior analyst at IndiaNivesh Securties Ltd., told BloombergQuint over the phone. “A point of concern is the R&D spend compared to total sales. Their guidance for promotion and marketing expenses for speciality drugs was higher for the year which can be expected in the coming quarters.”
The company’s U.S. sales, that accounted for 30 percent of the total consolidated revenue, were at $339 million for the quarter, flat over same period last year. Edelweiss report prior to the earnings expected revenue to decline in the absence of benefit from one-time supply opportunity, lack of any meaningful launches and tepid prescription trends for psoriasis drug Ilumya.
That comes at a time India’s pharmaceutical market grew at its fastest pace in more than a year in the quarter ended September as volumes and prices rose despite a fall in new launches. The domestic pharma market’s year-on-year sales growth was 11.5 percent in the three-month period—the highest at least five quarters, according to data released by AIOCD-AWACS— a pharmaceutical market research organisation.
Our second quarter and first half (of the year) performance demonstrates sustained growth momentum and is in line with our full-year guidance. We continue to focus on cost savings and efficiency improvement to align our generic business with the changing industry dynamics.Dilip Shanghvi, Managing Director, Sun Pharmaceuticals Ltd.
Highlights From The Concall:
- U.S. generic business hasn’t improved.
- Sales in China, Japan to improve.
- No plans to start manufacturing facility in China currently.
Shares of the company rose 3.3 percent after the earnings announcement compared to a 0.38 gain in the Nifty Index.
