Shanghvi's Sun surprises with loss amid drug slump

MUMBAI: Sun Pharmaceutical Industries Ltd reported its first quarterly loss in at least 12 years after settling an antitrust case in the US amid a global downturn in the generic-drug business.

India’s biggest drugmaker, founded by billionaire Dilip Shanghvi, posted a total loss of 4.25 billion rupees (US$66.3mil) in the three months ended June 30, the Mumbai-based company said in a filing yesterday.

Generic drugmakers have seen their US businesses deteriorate as regulators there step up product approvals, ushering in new competition and prompting a steady erosion in prices. Consolidation among the biggest pharmacies has also limited manufacturers’ pricing power.

US generic-drug giant Mylan NV lowered a long-targeted profit goal this week and Israel-based Teva Pharmaceutical Industries Ltd. said last week that it would pull back from 45 markets and cut jobs.

Sun Pharma’s Israel-based unit Taro Pharmaceutical Industries Ltd said it expects pricing pressure to continue.

Sun Pharma paid 9.51 billion rupees to plaintiffs including Canadian rival Apotex Inc in July to settle a US antitrust lawsuit over sleep-disorder drug modafinil, according to the filing.

Excluding the settlement, Sun’s profit was 5.3 billion rupees, down 74% from the same period last year amid slower sales in both India and the US.

Shanghvi said in a press release that the company’s first-quarter performance “was not good,” citing increased investments, disruptions in India due to the introduction of a new nationwide sales tax, and pricing challenges in the U.S. market for generic drugs.

“We expect our performance to gradually improve in the second half of this year,” he said.

Sun Pharma is particularly exposed to a squeeze on prices in the US, which accounts for about half its revenue.

Its ability to offset falling prices with new products is hampered by a Food and Drug Administration sanction, in place since December 2015, over manufacturing deficiencies at its factory at Halol in western India.

The company has been unable to shake off the sanction despite costly remediation efforts.

Sun’s US sales were down 42% from the previous year to US$351mil, though the earlier period included exclusive rights to sell generic versions of Novartis AG’s blockbuster cancer drug Gleevec that expired in July of last year, the company said in its press release.— Bloomberg