Billionaire Shanghvi's Sun Beats Net Estimates as Sales Rise

  • Sun will seek re-inspection of Halol facility within months
  • Emerging-markets joint venture with Merck mutually ended

Sun Pharmaceutical Industries Ltd., India’s largest drugmaker, reported third-quarter earnings that beat analyst estimates as domestic sales climbed and tax expenses dropped.

Net income for the quarter ended Dec. 31 was 14.2 billion rupees ($208 million), compared with the average estimate of 12.8 billion rupees from 25 analysts surveyed by Bloomberg. The stock advanced 2 percent to 847.35 rupees in Mumbai trading after surging as much as 6.5 percent.

Sun in recent months has sought to address shortcomings highlighted by the U.S. Food and Drug Administration at its Halol facility in India’s Gujarat state. The company in December received a warning letter from the FDA after an inspection at the plant, and Sun at the time said the FDA was withholding future product approvals from this facility.

Sun will seek re-inspection by the FDA for the Halol facility in the quarter ending in June, Managing Director Dilip Shanghvi said on a call with analysts today. As part of the process of integrating its acquisition of Ranbaxy Laboratories Ltd., Sun will exit products that were “very competitive and low margin” in Ranbaxy’s portfolio and will try to bring outsourced Ranbaxy products back in-house, Shanghvi said.

“The numbers look better than I expected,” Sarabjit Kour Nangra, an analyst at Angel Broking Ltd. in Mumbai, said of today’s earnings. “Sun’s domestic business has done better than previous quarters, and margins were better than expected.”

Revenue rose 2 percent to 70.5 billion rupees, while tax expenses fell to 2 billion rupees from 10.3 billion rupees a year earlier. Sales at home in India rose 8 percent to 18.9 billion rupees from a year earlier, while it dropped 11 percent in the U.S., the company said in a statement.

A joint venture between Sun and Merck & Co. to develop and sell drugs for emerging markets was mutually ended “due to changes in the strategic priorities” of both companies, Sun’s statement said.

In the previous quarter, Sun said it benefited from 180-day exclusivity on sales of valsartan tablets for heart failure and blood pressure in the U.S. Sun in December said it had received final approval from the U.S. FDA to sell a generic version of Novartis AG’s blockbuster cancer drug Gleevec. Sun’s Israeli unit Taro Pharmaceutical Industries Ltd. on Thursday reported an 8.7 percent increase in quarterly sales.

Sun is controlled by Shanghvi, who has a net worth of about $15.8 billion and is the second-richest man in India, according to the Bloomberg Billionaire’s index.

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