Sun Pharma Q1 Results: Taro Troubles In U.S. Cause Over Rs 1,600-Crore Loss

Sun Pharmaceutical Industries Ltd. reported a net loss for the quarter ended June as it provided for the resolution of multi-year investigations against its U.S. subsidiary— Taro Pharmaceutical Industries Ltd.

India’s largest drugmaker reported a net loss of Rs 1,665.6 crore compared to a net profit of Rs 1,496 crore during the same period last year. Analysts tracked by Bloomberg were expecting a profit of Rs 1,043 crore.

The company provided a sum of Rs 3,176 crore to settle Taro’s multi-year investigations by the Department of Justice in the U.S.

Overall exceptional items for the quarter stood at Rs 3,633.3 crore.

Taro Pharmaceutical Industries U.S.A had adjusted for settlements and contingencies worth $478.9 million to resolve all matters related to a long-running investigation by the U.S. Department of Justice that charged the company of conspiring to fix prices of certain generic drugs. That, coupled with its high exposure in ophthalmology and dermatology categories where the impact of Covid-19 lockdowns was more, led to a drop in sales and profit during the quarter.

Other Highlights (Year-on-Year)

• Sun Pharma's revenue fell 9% over the year-ago period to Rs 7,585 crore—lower than the Rs 7,993-crore forecast.
• Its operating profit fell 8% to Rs 1,764.5 crore. Analysts had pegged the metric at Rs 1,599 crore.
• Ebitda margin stood at 23.3% from 23% a year ago.

Geographical Performance

• Sales of branded formulations in India rose 3% to Rs 2,388 crore. India business accounted for 32% of total sales.
• Sales in the U.S. stood at $282 million. The U.S. business accounted of 29% of the total sales. The U.S. sales are not comparable as the base quarter included a one-time contribution from the special business in the U.S.
• Emerging markets sales fell 10.5% compared to the previous year to $173 million.
• Rest of the world markets, excluding the U.S. and emerging markets, fell 18.5% year-on-year to $136 million. The rest of the world contributed to 14% of the total sales, the company said in a press release.

Shares rose as much as 3.64% to Rs 528.5, post the quarterly results announcement. That compares to the 0.4% drop on the Nifty 50 index.