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Companies

Sun Pharmaceutical first-quarter profit jumps on US order

Net profit beats estimates, while revenue climbs 16%

On Friday, Sun shares closed down 1.6% in Mumbai trading, while the benchmark S&P BSE Sensex added 0.9%   © Reuters

MUMBAI (NewsRise) -- Sun Pharmaceutical Industries, India's largest drugmaker, on Tuesday reported a 31% jump in first-quarter net profit, helped by a "significant" order of generic drugs from a U.S. customer and lower research spending.

The billionaire Dilip Shanghvi-backed drugmaker's strong results underscore the improved pricing environment in the U.S., where falling prices amid expedited approval rates for generics had stoked fears of increased competition from new players.

Sun Pharmaceutical, for its part, has been steering its business away from cheap copycat generics to specialty drugs in a bid to circumvent the challenges. The company is investing millions of dollars in new drugs in dermatology, ophthalmology, and oncology which have started to bear fruit.

The company said its consolidated net profit for the quarter ended in June stood at 13.87 billion rupees ($195 million). Analysts were expecting a net profit of 10.46 billion rupees, according to Refinitiv data. The latest quarter included the financials of Pola Pharma, a Japanese company Sun bought last year to strengthen its global presence in dermatology.

Total revenue from operations surged 16% to 83.74 billion rupees. Spending on research and development initiatives fell 16%.

"We have recorded growth across most of the markets for the quarter and our performance is in-line with our full-year guidance," Managing Director Shanghvi said. The company is "encouraged by the potential of one of our pre-clinical research molecules, which is likely to enter clinical trials next year," he added.

Sales in its U.S. formulations business, which accounts for 36% of total revenue, gained 12% in the quarter. Sales for the quarter included contribution from "a significant" order of generic drugs by a customer, the company said.

In May 2018, Sun received the U.S. Food and Drug Administration's approval for its first biologic drug Ilumya, and in October the company launched the product in the U.S. Ilumya is "gradually gaining traction" in the U.S. and Western Europe, Shanghvi said.

In June, Sun entered licensing agreements with China Medical System Holdings to develop and commercialize two drugs -- Tildrakizumab used to treat psoriasis and Cyclosporine for dry eye -- in Greater China. Earlier this month, it also filed an application with Japanese authorities to make and market the psoriasis drug.

Shanghvi said the out-licensing agreement for the Greater China market and the regulatory filing of Tildrakizumab in Japan reflect the company's "global aspirations for the specialty business."

Sun's revenue growth in the U.S. last year also received a boost after its Halol plant in western India's Gujarat state got regulatory clearance in June. The facility was under a warning letter from the FDA for lapses in quality standards for two-and-a-half years. In June, the FDA issued four observations on the plant after an inspection.

Last week, Sun's smaller rival Lupin reported a quarterly profit in line with market expectations, but said a delayed rollout of new drugs was weighing on outlook.

Ahead of the results, shares of Sun closed up 3.7% in Mumbai trading, while the benchmark S&P BSE Sensex lost 1.7%.

--Dhanya Ann Thoppil

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