Sun Pharma reports strong Apr-Jun numbers, boosted by US, India growth

India’s biggest drug maker Sun Pharmaceutical Industries reported strong numbers for the first quarter of Apr-Jun this year, with rising sales lifting margins and profits.

Overall sales rose 16% on year to Rs. 7,139 crores, led by growth in key geographies such as the US, India and emerging markets. This was partly on account of the impact of GST in the underlying quarter.

Operating profit, after deducting finance costs, increased to Rs 1,274 cr in Apr-Jun this year, compared to just 792 cr last year.

This was primarily due to an increase of around Rs 1,020 cr in sales compared to expenses that increased only by around Rs 580 cr.

Despite the jump in sales, the company’s raw material and stock costs rose by only Rs 370 cr.

At a net level, the company had reported a loss of Rs 423 cr for the same quarter last year, but was able to post a net profit of Rs 983 cr this year.

On a sequential level, the company reported largely stable numbers, except for a sharp decline in non-operating income during the latest quarter.

Non operating income fell to Rs 85 cr from Rs 266 cr in Jan-Mar. The difference of Rs 181 cr in non-operating income was reflected in the sequential decline of Rs 102 cr in the company’s pretax profits in Apr-Jun.

SALES TRENDS

Sale of branded formulations in India for Q1FY19 was Rs 2,152 crores, up 22% and accounting for 30% of total
sales. However, sales for Q1 last year were impacted by the implementation of GST in India.

Sun Pharma is ranked No. 1 in India and holds approximately 8.3% market share in the over Rs. 122,000 crore Indian pharmaceutical market.

Sales in the US, largely formulations, were US$ 380 million for the quarter, a growth of 8% over same period last year. This was 36% of total sales.

Its US unit Taro posted Q1 FY19 sales of US$ 155 million, a 4% decline over Q1 last year. Taro’s net profit for Q1 was US$ 67 million, up by 23% over Q1 last year.

Sales in emerging markets were at US$ 195 million for Q1; a growth of 16% compared to the same quarter last
year and accounted for 18% of total sales.

Formulation sales in Rest of World (ROW) markets excluding US and Emerging Markets were US$ 107 million in
Q1FY19, a decline of 7% from Q1 last year and accounting for approximately 10% of revenues.

Dilip Shanghvi, Managing Director of the Company pointed out that the company has been able to record growth in all its big markets.

“We are gradually crossing key milestones in our specialty initiatives with the recent commercialization of Yonsa in the US and targeted launch of Ilumya and Cequa in the coming quarters,” he said.

“We are also awaiting approvals from US FDA for two specialty products, Xelpros and Elepsia, filed from Halol. With all these specialty launches lined-up, a substantial portion of our current specialty pipeline will be on market.

“We are creating a deep pipeline of specialty products, however, during the year these launches will result in significant upfront investments. We continue to evaluate opportunities in the specialty segment to further enhance this business.”

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