Weak Unichem earnings cast shadow on Lupin, Mylan in India

SINGAPORE--If Unichem Laboratories' ($UNICHEMLAB) third-quarter earnings report of net profits of only $334,316 (converted from Indian rupees) is any indication, Lupin ($LUPIN) and Mylan's ($MYL) India unit can soon be expected to reveal huge reductions for the period. They, Slovenian Krka and Teva Pharmaceutical ($TEVA) were fined a total of $427.7 million last summer by the European Commission for allegedly accepting pay for delay from France's Servier.

A brief item by Reuters Jan. 17 said no more than that Unichem reported a huge drop in its third-quarter profits that had been more than $12 million in 2013. That is just under the $16.1 million it was fined by the EC for its alleged role in a pay-for-delay scheme engineered by Servier to prevent generics of its best-selling blood pressure drug, perindopril.

Unichem filed an appeal of the fine in mid-December, contending that the EC lacked jurisdiction among other errors in reaching its antitrust decision. Lupin was fined $46.2 million and Mylan's India unit was fined $19.8 million, its parent $9.3 million. The bulk of the fines, about $325 million, were levied on Servier.

Unichem's board apparently expected the big hit at the beginning of the month when it announced the Jan. 17 meeting to consider "record un-audited results" and set a moratorium on trading. Unichem's sharp drop in profits was also affected in part by Germany's December recall of drugs from Unichem and 15 other drug companies because of trial errors.

The Germany case also involved India's Dr. Reddy's Laboratories. The Federal Institute for Drugs and Medical Devices said the companies that together produced 80 drugs under scrutiny had performed questionable bioequivalence tests of their versions of innovative drugs.

- read Unichem's third-quarter earnings report (PDF)
- get more from Reuters