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“This quarter I have a challenge. This result has to be compared to Q2 of last year which was the best quarter in the history of our company,” Sun Pharma Managing Director Dilip Shanghvi told analysts late on Saturday evening.
He was speaking on Sun’s financial performance in the second quarter (Q2), where its net profit saw a 46 per cent decline at ₹1,106 crore for the three-month period ended September 30, 2015. Sun’s net profit in the same period last year was ₹2,050 crore.
Taking the toll on the company’s performance were challenges including Ranbaxy’s integration cost, besides compliance efforts at its Halol plant that had come in for the stick from the US Food and Drug Administration.
The company’s remediation efforts are on track at Halol, where efforts are focused on setting right the deviations pointed out by the US regulator, he said. On Ranbaxy’s integration, he added, it was ahead of schedule and value from the integration would be realised by FY18.
Sun’s Q2 income from operations stood at ₹6,803 crore, down 15 per cent from the corresponding period last year. In Q2 last year, Sun had benefitted from a 180-day exclusivity it got to sell blood pressure pills Valsartan in the US. But the first six months of this financial year witnessed a setback because of what Shanghvi had then called a “short term pain” arising from the Ranbaxy integration. This included a one-time exceptional charge of ₹685 crore in the first quarter of FY16 as a potential write-off towards plant rationalisation in future.
Regions impacted Sun’s Q2 sales in the US at $510 million were down by 28 per cent. The region accounted for 48 per cent of total sales. In India, Sun’s sale of branded medicine in Q2 stood at ₹1,819 crore, up one per cent from last year. The segment accounted for 26 per cent of total sales.
Sun’s Q2 sales in the emerging markets at $140 million were down 16 per cent from the corresponding quarter last year, and it accounted for 13 per cent of total sales. The decline resulted from volatile currency movements in certain emerging markets and a strategic decision of not participating in low margin businesses, Sun said.
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