Battling pricing pressures in the US and at home, drug-maker Sun Pharmaceutical Industries has projected a revenue growth of 8-10 per cent in the year ahead.
“I see traction in all parts of the business,” Dilip Shanghvi, Managing Director told analysts on Tuesday, giving a guidance on the company’s growth prospects, taking into account remediation efforts at Sun’s Halol plant and the end of sales exclusivity on cancer drug Imatinib in the US. He also indicated that the recent acquisition of Novartis’ products in Japan would contribute to the company’s revenues later in the financial year.
Sun’s Halol plant has been under the US Food and Drug Administration’s scanner, and the company expects to invite the regulatory agency to inspect its plant.
Shanghvi also said that they expected to put one of Ranbaxy’s plants up for US FDA inspection. Four of Ranbaxy’s troubled plants came under Sun’s wing, following the $4-billlion acquisition that Sun completed last year. Sun has since been in the process of exiting low margin businesses and rationalising by selling non-strategic plants.
Last year, Sun had given a muted guidance due to regulatory challenges in the US involving its plants and the integration of Ranbaxy.
US price erosion Giving an insight into its key US market and the pricing pressures there, he said that price erosion on products stood between 5 and 10 per cent in the US, depending on the competition and their intensity. On the recent US Department of Justice’s subpoena on pricing and other issues, Sun’s Chief Financial Officer Uday Baldota said that the query was not product-specific and they were extending their co-operation, though a timeline was difficult to give on when this would be resolved.
The company has also announced a buyback, which Shanghvi explained was “to return money to shareholders”. This would be taken up in a board meeting on June 23.
Posts ₹1,713-cr net For the three months ended March 31, 2015, the Group posted a net profit of ₹1,713 crore against ₹889 crore in the same quarter last year.
Its total income stood at ₹7,599 crore for the quarter under review against ₹6,505 crore in last year’s comparable quarter.
The year ended with the Group clocking a net profit of ₹4,715 crore against ₹net profit of ₹4,539 crore last year.
Total income stood at ₹28,728 crore for the year ended March 31, 2016, against ₹27,842 crore last year.
Sun said its operating income for FY-16 included proceeds from brand divestments as mandated by various competition authorities pertaining to the Ranbaxy acquisition.
Net profit for the year had been adversely impacted by one-time charges related write offs and exceptional charges of ₹685 crore reported in Q1 FY16, it added.
“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’s research investments at ₹2,302 crore or 8.3 per cent of net sales was higher than the previous year’s 7.2 per cent of net sales for FY15.
This increased R&D expenditure includes significant investments on account of funding the clinical development of Tildrakizumab, in-licensed from Merck Sharp and Dohme (US).
Sun Pharma shares closed six per cent lower on the BSE, ₹Rs 762 on Tuesday.