India's Sun Pharmaceutical takes another Ranbaxy-related hit

Mumbai-based Sun Pharmaceutical Industries saw net profit slump nearly a third in its financial second quarter as costs related to its purchase of troubled Ranbaxy Laboratories continue to hound operations.

Dilip Shanghvi

Sun, the world's fifth-largest specialty generic pharmaceutical company and top producer in India, saw Managing Director Dilip Shanghvi again promise the merger will result in an overall stronger company by 2017.

Sun's net profit fell to INR11.07 billion ($165 million) in the second quarter ended Sept. 30, compared to INR15.72 billion in the same period a year earlier on revenues that fell 15% to INR68 billion.

Shanghvi reiterated to analysts that the company would exit nonstrategic businesses, which likely highlights more effort on the key U.S. market where sales dropped 28% to $510 million as the company battles a series of U.S. FDA bans on manufacturing plants.

"This quarter has been impacted by volatile currency movements and supply constraints" stemming from "remediation efforts" to repair lapses detected by the U.S. FDA at its Halol plant, Shanghvi said on a Nov. 7 call with analysts.

"Significant costs related to the (Ranbaxy) integration have been incurred."

Sun has also worked to fix legacy Ranbaxy plants that include the likely closure of one in Punjab.

Shanghvi told analysts to "continue to expect" increased research and development investment, saying the company had spent "aggressively" in the last quarter at nearly 7% of sales to boost its product portfolio.

"It enables future product pipeline development," he said.

The company has approved abbreviated new drug applications on 445 products in the U.S., while filings for 154 products await FDA approval. During the second quarter the company received four product approvals.

- here's the release (PDF)