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Sun Pharma's 59 per cent revenue growth and 85 per cent profit growth were driven by three one-off events during the quarter.
These events and rupee depreciation enabled a 10.8 percentage point improvement in the operating profit margins to 41.2 per cent.
The 49 per cent growth in the India formulations was helped by the change in distribution system, the details of which are not divulged. This added Rs 180 crores to the quarter's revenue.
The inventory adjustment on account of this change is likely to have a negative impact on the sales for the current quarter.
Even after adjusting for the one-time benefit, this segment grew ahead of the market, at a healthy 20 per cent during the quarter. Sun launched 22 products in the Indian market during the year, which includes the two anti-diabetic brands - Istavel (sitagliptin) and Istamet (sitagliptin and metformin) licenced from Merck Sharp and Dohme.
Secondly, stupendous growth in the US (83 per cent) was driven by one-off Lipidox (equivalent of J&J's anti-cancer brand Doxil) sales and impressive performance by Taro. Sun was granted temporary permit to sell Lipidox in the US, due to reduced supply from J&J.
Though J&J is expecting to resume full supply only by end of this calendar, Sun's ability to continue selling Lipidox is subject to validation of individual drug batches by US Food and Drug Administration (FDA).
Taro posted 35 per cent growth in revenue, 87 per cent growth in net profit and a 13.5 percentage point improvement in the operating margins to 48.8 per cent. This was largely facilitated by price increases in specific products during the quarter. In the management's view, the pace of growth may not be sustainable in the forthcoming quarters. Rupee depreciation against US dollar was yet another contributing factor to Sun's robust performance for the quarter.
The management has guided for 18-20 per cent sales growth for this fiscal. With an approval backlog of 147 Abbreviated new drug applications (ANDA) in the US, the company expects to file 25 ANDA's in FY13.
Sun's strength in the domestic market coupled with interesting product opportunities in the US like generic Prandin and generic Doxil (doxorubicin HCl liposome injection) are likely to drive Sun's growth in FY13. However, any adverse court ruling on the damages payable to Wyeth for launch of Protonix (pantoprazole) will be the key risk in the near term.
>Nalinakanthi.venkataraman@thehindu.co.in
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