Sun Pharma reports Q1FY19 results

Sun Pharmaceutical Industries reported financials for the first quarter ending June 30, 2018. Gross sales at INR 7,139 crores up 16 per cent, adjusted net profit at INR 983 crores up 87 per cent.

Highlights of Q1FY19 consolidated financials
· Sales / Income from operations at INR 7,139 crores, growth of 16 per cent over same quarter last year.
· India sales at INR 2,152 crores, growth of 22 per cent over Q1 last year.
· US finished dosage sales at US$ 380 million up by eight per cent over Q1 last year.
· Emerging Markets sales at US$ 195 million up by 16 per cent over Q1 last year.
· Rest of World sales at US$ 107 million, de-growth of seven per cent over Q1 last year.
· R&D investments of INR 500 crores, at seven per cent of sales.
· Received the Establishment Inspection Report (EIR) from the US FDA for the Halol facility in June-2018
· EBITDA at INR 1,521 crores, resulting EBITDA margin of 21.3 per cent.
· Net profit for the quarter at INR 983 crores, resulting net margin of 13.8 per cent. Net profit for the same quarter last year was adversely impacted by settlement with certain plaintiffs related to the Modafinil antitrust litigation in the US, with the settlement amounting to INR 951 crores. Excluding the impact of this settlement, adjusted net profit was up by 87 per cent over Q1 last year.

These results were taken on record by the Board of Directors at a meeting held in Mumbai recently. Dilip Shanghvi, Managing Director of the Company said, "For Q1, we have recorded good growth in all the major markets. We are gradually crossing key milestones in our specialty initiatives with the recent commercialisation of Yonsa in the US and targeted launch of Ilumya and Cequa in the coming quarters. We are also awaiting approvals from US FDA for two specialty products, Xelpros and Elepsia, filed from Halol. With all these specialty launches lined-up, a substantial portion of our current specialty pipeline will be on market. We are creating a deep pipeline of specialty products, however, during the year these launches will result in significant upfront investments. We continue to evaluate opportunities in the specialty segment to further enhance this business."

India Business – Market Leadership
Sale of branded formulations in India for Q1FY19 was INR 2,152 crores, up 22 per cent and accounting for 30 per cent of total sales. Sales for Q1 last year were impacted by the implementation of GST in India. Sun Pharma holds approximately 8.3 per cent market share in the over INR 122,000 crore Indian pharmaceutical market as per June-2018 AIOCD-AWACS report. As per latest SMSRC report, Sun Pharma is ranked no. 1 based on share of prescriptions with 13 classes of doctors. For Q1Y19, the company launched 16 new products in the Indian market.

US Formulations
Sales in the US were US$ 380 million for the quarter, a growth of eight per cent over same period last year and accounted for 36 per cent of total sales. At the same time, Taro posted Q1 FY19 sales of US$ 155 million, a four per cent decline over Q1 last year. Taro’s net profit for Q1 was US$ 67 million, up by 23 per cent over Q1 last year.

Emerging Markets
Sales in emerging markets were at US$ 195 million for Q1; a growth of 16 per cent compared to the same quarter last year and accounted for 18 per cent of total sales.

Rest of World Markets
Formulation sales in Rest of World (ROW) markets excluding US and Emerging Markets were US$ 107 million in Q1FY19, a decline of seven per cent from Q1 last year and accounting for approximately 10 per cent of revenues.

Active Pharmaceutical Ingredients (API): Strategic strength
API business imparts benefits of vertical integration for the company’s formulations business. For Q1FY19, external sales of API were at INR 394 crores, up 28 per cent over Q1 last year.

Research – Investing for future
Consolidated R&D investments for Q1FY19 was INR 500 crores, or 7.0 per cent of sales compared to INR 522 crores or 8.5 per cent of sales for Q1 last year.

Sun Pharma has a comprehensive product offering in the US market consisting of approved ANDAs for 428 products while filing for 135 ANDAs await approval, including 15 tentative approvals. For the quarter, three ANDAs were filed and six approvals were received. The portfolio also includes 39 approved NDAs/BLAs while 3 NDAs await US FDA approval.

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