Sun Pharma swings to first-quarter loss on litigation charges

Sun Pharmaceutical announced Friday that it posted a loss of 4.2 billion rupees ($65.5 million) in the three months ending June 30, versus a profit of 20.3 billion rupees ($316.4 million) in the year-ago period. Meanwhile, revenue fell nearly 25 percent to 62.1 billion rupees ($967.9 million), missing analyst expectations of about 70.9 billion rupees ($1.1 billion).

"Net profit for the quarter was adversely impacted by settlements with certain plaintiffs related to the modafinil antitrust litigation in the US," the company noted. The drugmaker indicated that it took a charge of 9.5 billion rupees ($148.1 million) related to the settlements. 

Regarding revenue in individual markets, sales in India fell 5 percent year-over-year to 17.6 billion rupees ($274.3 million), with the company attributing the decline in revenue to implantation of the Goods and Services Tax (GST). Meanwhile, revenue in the US plunged 42 percent to $351 million, with the company noting that sales in the year-ago period were boosted by exclusivity on generic imatinib, which expired in July 2016, while "overall pricing pressure impacted growth.

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Further, sales in emerging markets grew by 9 percent versus the year-ago quarter to $168 million, in part boosted by consolidation of the purchase of Russian firm Biosintez. Additionally, revenue in the rest of the world markets surged 37 percent to $115 million, which Sun Pharma attributed to sales generated by 14 brands acquired from Novartis.

Managing director Dilip Shanghvi said "Q1 performance was not good and not in line with past performance due to the combined impact of increasing investments in global specialty business, temporary disruption in India business due to GST implementation, a challenging US generic pricing environment." The executive indicated that Sun Pharma's performance is expected to gradually improve in the second half of this year.

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