Sun Pharma reports Q2FY20 results

Sun Pharmaceuticals recently reported financials for the second quarter and first half ending September 30th, 2019. The highlights of Q2FY20 consolidated financials are as follows:

• Sales/income from operations at Rs 7,949 crores, a growth of 16 per cent over same quarter last year
• India sales at Rs 2,515 crores, growth of 35 per cent over Q2 last year
• US finished dosage sales at $339 million, flat over Q2 last year
• Emerging markets sales at $201 million, up by three per cent Q2 last year
• Rest of the world sales at $161 million, growth of 49 per cent over Q2 last year
• R&D investments at Rs 488 crores (6.1 per cent of sales) compared to Rs 452 crores (6.6 per cent of sales) for Q2FY19
• EBITDA at Rs 1,616 crores up by 12 per cent over Q2 last year, with resulting EBITDA margin of 20.3 per cent
• Net profit for quarter at Rs 1,064 crores, with resulting net profit margin at 13.4 per cent. Adjusted for the exceptional item of Rs 1,214 crores for Q2 last year, net profit growth was 12.6 per cent.

Highlights of H1FY20 consolidated financials:

• Sales/income from operations at Rs 16,208 crores, growth of 16 per cent over same period last year
• India sales at Rs 4,828 crores, up by 20 per cent over H1 last year
• US finished dosage sales at $763 million up by six per cent over H1 last year
• Emerging markets sales at $394 million up by one per cent over H1 last year
• Rest of the world sales at $328 million, growth of 52 per cent over H1 last year
• EBITDA at Rs 3,496 crores up by 18 per cent over H1 last year, with resulting EBITDA margin of 21.6 per cent
• Net profit for H1FY20 at Rs 2,452 crores, with resulting net profit margin at 15.1 per cent. Adjusted for the exceptional item of Rs 1,214 crores for H1 last year, net profit growth was 22.5 per cent

Dilip Shanghvi, Managing Director, Sun Pharma, said, “Our Q2 and H1 performance demonstrate sustained growth momentum and is in-line with our full-year guidance. We continue to focus on cost savings and efficiency improvement to align our generic business with the changing industry dynamics. Simultaneously, we continue to progress on building our global specialty business. In the US, we recently launched Cequa while Ilumya continues to gain traction. The recently released long-term follow-up clinical data for Ilumya demonstrates sustained response for patients over four-year period with good safety profile. We are excited about the long-term prospects of Ilumya.”

India Business – Market Leadership

Sale of branded formulations in India for Q2FY20 was Rs 2,515 crores, up by 35 per cent over Q2 last year and accounted for 31.6 per centof total consolidated sales. For the first half, sales were at 4,828 crores, up by 20 per cent over the same period last year.

Sun Pharma is ranked number one and holds approximately 8.2 per cent market share in the over Rs 1,36,000 crore Indian pharmaceutical market as per AIOCD AWACS Sept-2019 report. For Q2FY20, the company launched 12 new products in the Indian market.

US Formulations (including Taro)

Sales in the US were $339 million for the quarter, flat over same period last year and accounted for 30 per cent of total consolidated sales. For first half, sales were $763 million recording a growth of six per cent over the same period last year.

Taro Performance

Taro posted Q2FY20 sales of $161 million, up one per cent over Q2 last year. For the first half, sales were $322 million, up by three per cent over first half last year. Taro’s net profit for Q2 was $ 56 million, down by 10 per cent over Q2FY19. Net profit for H1FY20 was $122 million, down by six per cent over first half last year.

Emerging markets

Our sales in emerging markets were at $201 million for Q2, up three per cent over same quarter last year. Sales in emerging markets accounted for 17.8 per cent of total consolidated sales for the quarter. For the first half, sales were $394 million, up by one per cent over first half last year.

Rest of World Markets:

Formulation sales in the Rest of World (ROW) markets excluding the US and Emerging Markets were $161 million in Q2FY20, a growth of 49 per cent over Q2 last year and accounting for approximately 14.3 per cent of total consolidated sales. Growth drivers include both, organic initiatives as well as consolidation of Pola Pharma (Japan) business. For the first half, sales were $328 million, up by 52 per cent over first half last year.

Active Pharmaceutical Ingredients (API): Strategic strength

Our API business imparts benefits of vertical integration for our formulations business. We continue to increase the API supply for captive consumption for key products. For Q2FY20, external sales of API were at Rs 468 crores, up by 10 per cent over Q2 last year. For the first half, API sales were at Rs 929 crores, up by 13 per cent over first half last year.

Research – Investing for future

Consolidated R&D investment for Q2FY20 was Rs 488 crores, or 6.1 per cent of sales as compared to Rs 452 crores or 6.6 per cent of sales for Q2 last year. For the first half, R&D expense was Rs 910 crores, or 5.6 per cent of sales.

We have a comprehensive product offering in the US market consisting of approved ANDAs for 472 products, while filings for 103 ANDAs await US FDA approval, including 20 tentative approvals. For the quarter, two ANDAs were filed and seven approvals were received. Additionally, the pipeline includes 54 approved NDAs, while five NDAs await US FDA approval.