The Hindu Business Line : Taro spat: ‘Sun Pharma on a strong wicket’

“We are on a strong wicket to complete the acquisition,” said Mr Dilip Shanghvi, Sun Pharma’s Chairman and Managing Director, in his prelude to a discussion with analysts on the company’s financial performance.

Israeli drug-maker Taro’s abrupt termination of Sun Pharma’s $454-million merger proposal, a couple of days ago, and Sun Pharma’s subsequent strong response, was top of mind, but Mr Sanghvi did not want to divulge details.

“Based on our understanding, and our lawyers’ advice, we have many options,” he said, indicating further in a response to Business Line that arbitration could be one of them.

Sun Pharma maintains that the revised $10.25 per share offer to Taro is in its best interest and Taro was not entitled to snap the agreement.

Performance

Sun Pharma saw a healthy consolidated performance for the three months and year ended March 31, 2008, buoyed by the sales of generic drugs in the domestic and overseas market.

Sales of domestic formulations, speciality prescription brands sold in India, stood at Rs 1,476 crore, a growth of 25 per cent over the last year, contributing 43 per cent of total sales. For the fourth quarter, domestic formulations sales increased by 16 per cent.

International sales account for half of Sun Pharma’s consolidated revenues. The company’s consolidated net sales for the period under review were Rs 3,356 crore, a 57 per cent increase from Rs 2,135 crore for the full financial year. International business grew 96 per cent, and US generic sales increased 167 per cent. Consolidated net profit was Rs 1,486 crore, up 90 per cent over the previous year. But some of the intellectual property related upsides were not of recurring nature, company management cautioned.

With generic Protonix and Ethyol, this year saw the first of “at-risk” launches. These launches had a one-off effect on our US generic sales and profits, the company said. The company has a will-not-sue covenant on generic Effexor XR, and expects to launch the product after US FDA approval.

Research spend

The company expects to spend about seven to eight per cent of its sales on generic research (which remains with the parent company), he told analysts. Sun Pharma’s innovative research had got demerged and listed last year.

Consolidated research spending for the quarter was Rs 83 crore, and Rs 299 for the year ended March ’08. This translates to about 9 per cent of net sales for the fiscal.

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