Revenue too fell 9.3% to 75.9 billion rupees compared to the year-ago period, according to a filing Friday by the Mumbai-based company.
Sun Pharmaceutical Industries Ltd. reported a surprise quarterly loss as it set aside nearly $480 million to settle drug price-fixing allegations in the U.S. Sales also fell amid pandemic-led lockdowns that have reduced hospital visitations for other medical needs.
India’s largest drugmaker posted a net loss of 16.6 billion rupees ($222 million) for the quarter ended June 30, compared to the 13.9 billion rupees profit forecast in a Bloomberg survey of analysts, dragged down by a one-time charge of 36.3 billion rupees. Revenue too fell 9.3% to 75.9 billion rupees compared to the year-ago period, according to a filing Friday by the Mumbai-based company.
Sun Pharma’s subsidiary, Taro Pharmaceutical Industries Ltd., last week agreed to pay $206 million in the U.S. to settle criminal charges that it conspired with competitors to rig the prices of generic drugs between 2013 and 2015 — the latest case to emerge from an industrywide probe by the U.S.’ Justice Department.
Generic Drug Maker Taro Settles U.S. Price-Fixing Charges
Taro is paying an additional $213 million to resolve civil claims brought by the Justice Department and also set aside an additional $60 million as a provision for “related ongoing multi-jurisdiction civil antitrust matters,” Sun Pharma said in its statement.
The Indian drugmaker’s revenues were also affected as surging coronavirus cases stretch hospitals around the world and crowd out other kinds of medical care. From elective surgeries to routine checkups for chronic diseases, all other kinds of hospital visits have fallen by the wayside as patients either avoided health facilities for fear of infection or simply couldn’t reach them due to lockdowns.
Damper for Sun
This has proved a damper for Sun’s portfolio of generic drugs, many of which are for chronic ailments. Two of its top markets, the U.S. and India, have the largest and third-largest virus outbreaks in the world.
The latest quarterly “performance reflects the impact of the global Covid-19 pandemic and consequent lockdown across markets and is not an indicator of the underlying strength of our business,” Dilip Shanghvi, Sun’s managing director, said in a statement Friday.
Investors too are upbeat about Sun Pharma’s prospects now that the U.S. charges have been settled. The American drug regulator has begun lifting bans on plants manufacturing generic drugs to ensure there are no drug shortages and the Indian government is taking steps to promote manufacturing of drug ingredients at home.
Sun Pharma’s shares rose 4.3% to close at 531.7 rupees on Friday after the earnings, pushing this year’s increase to almost 23%. Benchmark S&P Sensex has slipped almost 9% so far this year.
“Investors are discounting these earnings numbers because the economy is already starting to open up,” said Rohit Bhat, a Mumbai-based sector analyst with B&K Securities India Pvt. Ltd.
People are looking beyond this quarter because Sun is one of the biggest companies that makes bulk drugs, or basic raw materials from which medicines are made, according to Bhat. “That’s where everyone is benefiting right now.”