Sun Pharma Reports Q2FY19 Results

Sun Pharmaceutical Industries Ltd. reported financials for the second quarter and first half ending September 30th, 2018. Highlights of Q2FY19 consolidated financials:

• Sales/income from operations at ₹6846 crores, growth of 4 percent over same quarter last year.
• India sales at ₹1860 crores, de-growth of 16 percent.
• US finished dosage sales at USD 342 million up by 11 percent over Q2 last year.
• Emerging Markets sales at USD 195 million flat over Q2 last year.
• Rest of World sales at USD 108 million, de-growth of 2 percent over Q2 last year.
• R&D investments at ₹452 crores (6.6 percent of sales) compared to ₹511 crores (7.7 percent of sales) for Q2FY18.
• EBITDA at ₹1440 crores, resulting EBITDA margin of 21 percent.
• Adjusted net profit for Q2FY19 was at ₹996 crores with resulting adjusted net profit margin at 14.5 percent. After accounting for the provision of ₹1214 crores for the estimated settlement amount payable to all the remaining plaintiffs related to the Modafinil antitrust litigation in the US, the net loss for the quarter was at ₹219 crores.

Highlights of H1FY19 consolidated financials:

• Sales/income from operations at ₹13,985 crores, growth of 10 percent over same period last year.
• India sales at ₹4012 crores, up by 1 percent over H1 last year.
• US finished dosage sales at USD 721 million up by 9 percent over H1 last year.
• Emerging Markets sales at USD 391 million up by 8 percent over H1 last year.
• Rest of World sales at USD 216 million, de-growth of 5 percent over H1 last year.
• EBITDA at ₹2961 crores, resulting EBITDA margin of 21 percent.
• Adjusted net profit for H1FY19 was at ₹1978 crores, up 38 percent over H1 last year, with resulting adjusted net profit margin of 14 percent. The reported net profit for the H1FY19 at ₹764 crores, was after providing an amount of ₹1214 crores for the estimated settlement amount payable to all the remaining plaintiffs related to the Modafinil antitrust litigation in the US.

These results were taken on record by the Board of Directors at a meeting held in Mumbai. Dilip Shanghvi, Managing Director of the Company said, “Our soft Q2 performance is not a reflection of the underlying health of the overall business. We continue to focus on strengthening our core operations and enhancing our overall efficiencies. We are fairly positive on our performance for the rest of the year. We are excited with the successful launch of Ilumya in the US.”

India Business – Market Leadership

Sale of branded formulations in India for Q2FY19 was ₹1860 crores, down by 16 percent mainly due to a planned one-time inventory reduction in the supply chain coupled with a higher base of Q2 last year. The business accounted for 27 percent of total sales. For the first half, sales were at 4012 crores, up by 1 percent over same period last year. Sun Pharma is ranked No. 1 and holds approximately 8.3 percent market share in the over ₹126,000 crore Indian pharmaceutical market as per AIOCD AWACS September-2018 report. As per latest SMSRC report, Sun Pharma is ranked no. 1 based on share of prescriptions with 12 classes of doctors. For Q2FY19, the company launched 13 new products in the Indian market.

US Formulations

Sales in the US were USD 342 million for the quarter, a growth of 11 percent over same period last year and accounted for 35 percent of total sales. For first half sales were USD 721 million recording growth of 9 percent over same period last year. At the same time, Taro posted Q2FY19 sales of USD 159 million, down 6 percent over Q2 last year. For the first half, sales were USD 314 million, down 5 percent over first half last year. Taro’s net profit for Q2 was USD 63 million, up by 19 percent over Q2 last year. Net profit for H1FY19 was USD 130 million, up by 21 percent over first half last year.

Emerging Markets

Our sales in emerging markets were at USUSD  195 million for Q2; flat over same quarter last year and accounted for 20 percent of total sales. For the first half, sales were USUSD  391 million, up by 8 percent over first half last year.

Rest of World Markets

Formulation sales in Rest of World (ROW) markets excluding US and Emerging Markets were USD 108 million in Q2FY19, a de-growth of 2 percent from Q2 last year and accounting for approximately 11 percent of revenues. For the first half, sales were USUSD  216 million, down by 5 percent over first half last year.

Active Pharmaceutical Ingredients (API): Strategic Strength

Our API business imparts benefits of vertical integration for our formulations business. We continue to increase the API supply for captive consumption for key products. For Q2FY19, external sales of API were at ₹426 crores, up by 10 percent over Q2 last year. For the first half, API sales were at ₹820 crores, up by 18 percent over first half last year.

Research – Investing for Future

Consolidated R&D expense for Q2FY19 was ₹452 crores, or 6.6 percent of sales compared to ₹511 crores or 7.7 percent of sales for Q2 last year. For the first half, R&D expense was ₹952 crores, or 6.8 percent of sales. We have a comprehensive product offering in the US market consisting of approved ANDAs for 432 products while filings for 134 ANDAs await US FDA approval, including 15 tentative approvals. For the quarter, 4 ANDAs were filed and 4 approvals were received. Additionally, the pipeline includes 48 approved NDAs while 6 NDAs await US FDA approval. – Medical Buyer Bureau