Sun Pharmaceutical's revenues have taken a double whammy from quality problems the FDA cited at a plant in India. The drugmaker said they were down, both because of the costs of fixing the plant and because the of supply interruption from that effort.
|Sun Pharmaceutical Managing Director Dilip Shanghvi|
"Our Q3 performance reflects our ability to maintain strong profitability despite temporary supply constraints resulting primarily from the on-going compliance efforts," Dilip Shanghvi, managing director, said in an earnings release. "We are currently maintaining our FY15 sales guidance."
The Indian drugmaker said Saturday that its net income for the three months ended Dec. 31 fell 7% to 14.3 billion rupees ($230 million). According to Bloomberg, that resulted in the Mumbai-based company missing analyst estimates of 16.5 billion rupees. Sun said 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.
Sun, which last year agreed to buy long-troubled competitor Ranbaxy Laboratories in an all-stock deal now valued at about $4 billion, said most of the regulatory approval it needs to close that deal has been granted. It is still awaiting a signoff by the high court in India. Shanghvi has said that his top priority is fixing the problems at Ranbaxy that have left all but one of its FDA-approved plants banned from selling in the U.S. Ranbaxy has had two plants banned in the last 8 months, blocking it from getting some valuable first-to-file generic drugs to market, and two others that 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. In January, Ranbaxy reported a loss for its third quarter because of the many FDA regulatory issues with which it is dealing.
It was shortly after it announced the merger with Ranbaxy that the FDA banned Sun's plant in Vadodara, Gujarat, India for many of the same issues that have plagued Ranbaxy facilities. In a warning letter last year, it said Sun employees routinely deleted records of batch failures then retested drugs, reporting they met the standards that they previously couldn't hit. FDA inspectors even fished torn and partially destroyed raw data cGMP records out of the trash.