Sun Pharma Q1 net rises 31% to Rs 1,387 crore on lower R&D expenses

Sun Pharmaceutical Industries has commenced pre-clinical research to develop new specialty drugs, the company announced after reporting a net profit of Rs 1,387 crore in the first quarter (April-June) of 2019-20.

This was 31 per cent higher on a year-on-year basis, on the back of revenue growth, lower research and development (R&D) expenses and foreign exchange gain. “We have recorded growth across most of the markets for the quarter and our performance is in line with our full-year guidance. We are consistently focusing to ensure reasonable returns for our generics business. At the same time, we continue our unwavering efforts on building the specialty business,” said Managing Director Dilip Shanghvi. 

India’s largest drugmaker has raised focus on specialty and limited competition products in the wake of pricing pressure in the US. This has led to higher spending on branding and promotion but is resulting in increased traction for its specialty plaque psoriasis treatment drug, Ilumya, in the US and Europe, it said. It disclosed specialty products contributed $ 94 million to revenue.

Revenue from operations rose 16 per cent to Rs 8,259 crore, supported by growth in the US. Sales in the latter increased 12 per cent and gains came from significant supply of generic drugs to a customer. The earnings before interest, tax and depreciation margin expanded by 22.8 per cent due to lower research expenses and foreign currency gain. R&D expenses were 5.1 per cent of revenue, compared to 7 per cent in the first quarter of 2018-19. However the company indicated that R&D costs will increase in coming quarters while finance costs will reduce due to debt reduction.

Sun Pharma also said it had commenced research on developing an early-stage innovation pipeline for the specialty business. “Addition of new research candidates is imperative to ensure sustainability of the pipeline in the long-term. The current early-stage specialty pipeline includes some pre-clinical research candidates, of which one molecule has demonstrated best-in-class therapeutic effects in early pre-clinical models and is likely to enter clinical trials next year,” the company said.

As a part of a management team reshuffle, Shanghvi on Tuesday announced that Kal Sundaram who now heads the India and emerging markets business for Sun Pharma will now oversee the strategic initiatives for the company along with Japan and China markets. Kirti Ganorkar, the global business development head, will now look after the India formulations business. The company's generic business development function will be handled by Aalok Shanghvi. Sun Pharma is looking for a fresh recruit for its branded business development function.