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Sun Pharmaceutical Industries Ltd has responded to a couple of queries from the Securities and Exchange Board of India (SEBI), the drugmaker’s Managing Director Dilip Shanghvi told analysts here on Tuesday while discussing the company’s financial performance for Q3 FY19.
While the company has still to access the whistleblower report, it has responded to two queries from SEBI on its 2004 FCCB issue and its transaction with Aditya Medisales Ltd, Shanghvi said in his opening remarks, addressing recent corporate governance concerns being asked by investors against the backdrop of the whistleblower submission.
Clarifies on AML, Atlas Global transactions
Responding to whether AML had benefited at the cost of minority shareholders, Shanghvi clarified that Sun shareholders had not been “disadvantaged” because of the AML transaction. He reiterated Sun’s recent statement on transitioning the distribution of its domestic formulations business from Aditya Medisales Ltd (AML), its current distributor, to a wholly owned subsidiary of Sun Pharma. The change will become effective by the first quarter of FY20, he added.
The company management also clarified on Sun’s transaction with third party Atlas Global. Sun’s consolidated balance sheet (as on March 31,2018) had reflected a liability towards obligation of supplies to Atlas Global Trading amounting to Rs2,238 crore ($345 million). “This liability was in respect of Atlas assuming the damages on account of Protonix patent litigation settlement entered by Sun Pharma,” the company had said. The company was in the process of unwinding this transaction and Atlas would assign its rights and obligations to a wholly owned subsidiary of Sun, the company's top brass said.
Earnings
Sun Pharma net profit for the three months under review stood at ₹1,242 crore, reflecting an “adjusted” growth of 49 per cent, as last year’s net profit for the same period had been adversely impacted by a one-time deferred tax adjustment of ₹513 crore related to changes in US tax rates.
Sun’s income from operations was ₹7,657 crore, a 16 per cent growth from the same period last year. The company’s India sales grew 7 per cent at ₹2,235 crore. Its US finished dosage sales were at $362 million was up 10 per cent; emerging markets sales were at $203 million, up 7 per cent; and its rest of the world sales were at $ 125 million, up 4 per cent.
Its R&D investments stood at ₹465 crore (at 6.1 per cent of sales), compared to ₹473 crore (7.2 per cent of sales) for Q3 FY18. Sun had taken back unviable product applications for the US in the quarter, Shanghvi said, adding that the generic drugs landscape would be critically evaluated.
But research spending was expected to increase next year on account of clinical trials on Ilumya for new indications.
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