Sun Pharma posts higher Q4 profit on strong domestic, emerging market sales

Sun Pharmaceutical on Friday announced that profit for the fourth quarter rose 6.9 percent year-over-year to 13.1 billion rupees ($193.3 million), besting expectations of about 9 billion rupees ($133 million), boosted by a one-time tax write-back of 2.6 billion rupees ($38 million). Sales in the three-month period declined 1.1 percent to 72.8 billion rupees ($1.1 billion), ahead of forecasts of 67.8 billion rupees ($1 billion). 

The Indian drugmaker said performance in the quarter was bolstered by 2-percent growth for domestic branded formulations revenue to 19.6 billion rupees ($289.1 million), as well as a 10-percent increase in sales in emerging markets to $199 million, boosted in part by the full-year consolidation of the Biosintez acquisition in Russia.

Sun Pharma managing director Dilip Shanghvi remarked "our fourth-quarter performance is in-line with our guidance." He noted that "over the last four quarters, we have been able to record a gradual improvement in performance despite a challenging US generic pricing environment."

Quarterly revenue in the US fell by 3 percent versus the year-ago period to $368 million, representing 35 percent of total revenue. Meanwhile, sales in the rest of the world were up 6 percent year-over-year to $116 million. 

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For the full fiscal year, Sun Pharma said its net profit plunged 69 percent to 21.6 billion rupees ($318.7 million), which the company noted partially reflected settlements of claims related to modafinil. Full-year revenue reached 264.9 billion rupees ($3.9 billion), versus 315.8 billion rupees ($4.7 billion) in the prior year.

Regarding individual markets, full-year sales in the US dropped by 34 percent to $1.4 billion, with the company explaining that revenue in the prior year reflected the benefit from imatinib exclusivity. Meanwhile, revenue in emerging markets jumped 11 percent to $751 million, while sales in the rest of the world climbed 20 percent to $461 million.

Shanghvi stated that Sun Pharma plans to launch three specialty products in the US in the 2019 financial year, including dry-eye treatment OTX-101 and prostate cancer drug Yonsa, as well as the biologic therapy Ilumya, which was cleared by the FDA in March for use in certain adults with moderate-to-severe plaque psoriasis. "We want to find a new engine of growth and that is why we are investing in this," Shanghvi said, adding "we will have to incur significant expenses for these important launches." The managing director also indicated that Sun Pharma is "planning to conduct additional clinical trials for a new indication of Ilumya." 

Looking ahead, the company warned that it expects its 2019 fiscal revenue will fall short of the 300.4 billion rupees ($4.4 billion) analysts are projecting due to pricing pressure in the US. According to Shanghvi, Sun Pharma now intends to cut research spending on some generic drug projects deemed "unviable." Meanwhile, the executive said the company is "trying to get the (Halol) plant re-certified at the earliest. It's taking much longer." The Halol plant has been under an FDA warning letter since 2015. Following a re-inspection earlier this year, the number of potential manufacturing violations reportedly dropped to three from nine the last time it was inspected, but the facility has still not been cleared.

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