Sun Pharmaceutical Profit Surges Before Pfizer Settlement Charge

Sun Pharmaceutical Industries Ltd., India’s biggest drugmaker by market value, posted a 56 percent increase in profit before a one-time charge as sales of its generic drugs in the U.S. climbed.

Profit before a one-time payment to settle a patent litigation with Pfizer Inc. was 12.41 billion rupees (204.8 million) in the quarter ended June, compared with 7.96 billion rupees a year earlier, the Mumbai-based Sun said in a statement today. The group reported a loss of 12.8 billion rupees during the period, compared with a median estimate for a profit of 10.3 billion rupees in a Bloomberg survey.

“If you exclude the one-time payment, which was known to the market, the sales, margins and profits have all beaten our estimates,” said Ranjit Kapadia, an analyst at Centrum Broking Pvt. “We expect the stocks to rally about 5 percent” on Aug. 12. Centrum will maintain its buy rating on the stock and revise the target price of 628 rupees, Kapadia said.

Sun, controlled by billionaire Dilip Shanghvi, paid 25.2 billion rupees to Pfizer to settle the litigation over sales of heartburn drug Protonix, the company said. Sun agreed in June to pay $550 million as settlement, compared with the $100 million it had set aside for the damages. Sun and Teva Pharmaceutical Industries Ltd. will together pay $2.15 billion to Pfizer and a partner to settle the litigation, Pfizer said in June.

Sales increased 31 percent to 34.8 billion rupees in the three months ended June from a year earlier, Sun said. Sales of finished dosages in the U.S. grew 28 percent to $364 million in the first quarter from a year earlier, it said. Overseas sales accounted for 57 percent of Sun’s total revenue in the year ended in March 2011.

Sun’s shares have advanced 50 percent to 505.70 rupees in the past year, the most among the 30 companies on the benchmark S&P BSE Sensex. The 17-member S&P BSE India Healthcare Index has rallied 21 percent in the past year compared with an advance of 7 percent on the Sensex.

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