Sun Pharma Q1 net profit down by 60% over integration woes

New Delhi: Sun Pharma today reported 60 percent dip in consolidated net profit to Rs 478.96 crore for the quarter ended 30 June, pulled down by impairment charges and expense of Rs 685.17 crore on account of integration and optimisation post the Ranbaxy merger. Sun Pharma had posted net profit after taxes and minority interest of Rs 1,204.59 crore for the April-June period of last fiscal, 2014-15.[caption id=“attachment_2159087” align=“alignleft” width=“380”] Rising profits. Reuters[/caption] Total income of the company increased however to Rs 6,767.58 crore during the first quarter of 2015-16 as against Rs 6,341.21 crore for the year ago period. Sun Pharmaceutical Industries managing director Dilip Shanghvi said: “Our performance for the quarter has been impacted by certain one-time and exceptional charges which will drive synergies and overall profitability improvement in the long-term.” The company had a one-time item as well as exceptional charges of Rs 685 crore. “These exceptional charges relate to impairment of fixed assets and goodwill and other related costs and have arisen on account of integration and optimisation measures,” the company said. Sun Pharma had completed the $4 billion merger deal with Ranbaxy Laboratories in March this year. Shanghvi said nonetheless, “we continue to invest significantly in R&D and in building critical talent for enhancing our speciality and complex generics pipeline”. As a part of this initiative, Sun pharma has strengthened ophthalmology and OTC teams in the US as well as formed a dedicated team for a new drug molecule which is currently undergoing Phase-III clinical trials. Sale of branded prescription formulations in India for first quarter of FY16 was Rs 1,784 crore, up 11 percent from the corresponding quarter last year and accounting for 27 percent of the total sales, Sun Pharma said. Sales in the US stood at $488 million for the quarter, down 4 percent from the first quarter of last fiscal and accounted for 47 percent of total sales. “Sales for the quarter (in the US) were impacted primarily due to competitive pressure on some products and temporary supply constraints arising from remediation efforts at the Halol facility,” Sun Pharma said. The company’s Israeli arm Taro recently posted sales of $215 million, up 65 percent from the same quarter of last fiscal. Taro’s net profit for the first quarter was $104 million, up 125 percent from a year ago, it added. In the emerging markets, sales stood at $133 million in the first quarter, down 15 per cent from the year-ago eriod and accounted for 13 per cent of the total sales. The decline is the result of volatile currency movements in certain emerging markets and a strategic decision of not participating in low margin businesses, Sun Pharma said. In the Rest of World (ROW) markets, excluding US and emerging markets, formulation sales were at $91 million in the first quarter of 2015-16, down 7 percent from the year-ago period. A conscious effort at reducing the participation in non-remunerative businesses has contributed to de-growth in the business, Sun Pharma said. The API business is of strategic importance to the company due to benefits from vertical integration. It increased the API supply for captive consumption significantly for key products. External sales of API were at Rs 271 crore, up 32 percent from the corresponding quarter last year. The company’s consolidated R&D expense for the first quarter of the current fiscal was Rs 511 crore, or 7.8 percent of sales. This includes significant investments on account of funding the clinical development of MK-3222, the IL-23 monoclonal anti-body in-licensed from MSD (US). “We now have a comprehensive product offering in the US market with approved ANDAs for 442 products while filings for 159 products await US FDA approval, including 12 tentative approvals. For the first quarter, ANDAs for 6 products were filed and 4 approvals were received, " Sun Pharma said. Sun Pharma stock closed flat at Rs 841.80 on the BSE. PTI