Sun Pharmaceutical, India’s largest drugmaker by sales, has reported 26.44% on-year drop in consolidated profit, impacted by higher other expenses and lower forex gain with slow revenue growth.
The bottom line for the quarter stood at Rs 913.52, a decline from Rs 1,241.85 crore in the same period last year.
Revenue from operations grew by 5.36% on year to Rs 8,154.85 crore the December quarter, meeting street estimates.
Sun Pharma has identified a bigger emphasis on specialty products in the global and local markets alongside cost optimization as a key growth driver going forward.
In a conference call with analysts and institutional investors, Sun Pharma underlined the importance of specialty business and active pharma ingredients (API) as key growth drivers in India and Global markets.
The company is in the process of controlling costs and increasing efficiency across geographies while increasing investments in a specialty business.
It also touched upon its efforts to curtailing costs. Other exps are higher on account of increased marketing spend on Specialty business, consolidation of Pola Pharma as well as increased R&D spend.
Sun Pharma’s gross margins improved marginally due to better product mix, however, net profit was lower due to higher other expenses, lower forex income and higher tax.
Research and Development expenditure are set to increase as the company continues to enhance the pipeline through investment.
Consolidated R&D for the fiscal third quarter stood ad Rs 527 crore, 6.6% of sales. Its sales grew sequential on the back of favorable seasonality factor and launch of Cequia.
The company is witnessing traction in global specialty business. Specialty business sales were $118mn across all geographies while specialty R&D constitutes 24% of total R&D cost.
It has initiated efforts to increase India businesses by increasing the field workforce by 10% by Q1FY21.
As regards US business, it has filed a response with USFDA for Halol for 8 observations issues in Dec’19 inspection. US sales of $350 million, account for 31% of total revenues.
US space continues to be competitive however to aid the growth, the company is launching new products every quarter. Generics portfolio has witnessed a marginal decline
Meanwhile, it has filed 94 ANDAs and 6 NDAs are awaiting approvals, post-withdrawal of few unviable ones.
The Global Specialty revenue stood at US$118mn during the quarter vs US$91mn in the previous quarter.
As regards the Corona Virus the company management has stated that the impact may be difficult to quantify as the supply chain of procured APIs cannot be traced.
However, a large part of the API / Intermediate manufacturing plants are not in the areas that are most impacted by a coronavirus.
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