Sun Pharmaceutical subsidiary Taro Pharmaceuticals was the one bright spot in the Indian-based drugmaker's Q3 fiscal universe reported late last week.
Taro, which is Israeli-based and focused primarily on the U.S. market, saw its net profit bump up 22.4% for the third quarter ended Dec. 14, rising to $142 million from $116 million for the same period last year. Net sales were $238 million for the quarter, up 11.2% from $214 million.
The numbers for Taro, which is 60% owned by Sun, were the antithesis of its parent's numbers. Sun said its net income for the three months ended Dec. 31 fell 7% to 14.3 billion rupees ($230 million), and revenues in the U.S., which accounted for nearly 60% of its total, were $413 million, off by 5% from the same quarter last year.
Taro primarily manufactures prescription and OTC pharmaceutical products with a focus on pediatric creams and ointments, liquids, capsules and tablets used for dermatological, topical, cardiovascular, neuropsychiatric and anti-inflammatory treatments.
Sun had waged a prolonged battle to gain full control of Taro as part of an effort to grow its presence in the U.S. market. In 2012, Sun put a $685 million offer on the table to snap up all of Taro, but shareholders thought the offer undervalued and rejected the proposal.
Still anxious to grow its U.S. market share, last year Sun agreed to buy long-troubled competitor Ranbaxy Laboratories in an all-stock deal now valued at about $4 billion. All that's needed to close that deal is a signoff by the high court in India. Unfortunately, Sun's top priority will be remediating problems at Ranbaxy that have left all but one of its FDA-approved plants banned from selling in the U.S.
In the last 8 months, Ranbaxy has had two plants banned that have kept it from getting some valuable first-to-file generic drugs to market. Two other Ranbaxy plants have been excluded from the U.S. market for more than 5 years. All four plants operate under a consent decree overseen by the FDA.
Additionally, the FDA banned Sun's plant in Vadodara, Gujarat, India, for many of the same issues that plagued Ranbaxy facilities. In a warning letter last year, the U.S. regulatory agency said Sun employees routinely deleted records of batch failures and then retested drugs, reporting that they met the standards that they previously couldn't hit.
- see Sun's earnings report (PDF)
- read the pharmabiz.com take