Saturday, May 30, 2015
Sun Pharmaceutical Industries Ltd, India's largest drugmaker by sales, reported fourth-quarter profit well below analysts' expectations, hit by costs related to integrating smaller rival Ranbaxy Laboratories Ltd.
Sun, run by billionaire Dilip Shanghvi, reported a net profit of 8.88 billion rupees ($139.28 million) for the January-March quarter, while analysts on average had forecast a profit of 16.09 billion rupees. In the same quarter a year earlier, Sun Pharma posted a profit of 15.87 billion rupees.
Shanghvi declined to give a guidance for fiscal 2016, citing "complexities involved in merging two large companies".
"The Ranbaxy merger has taken more time than originally envisaged," he said on an conference call with analysts on Friday.
Sun Pharma completed its acquisition of Ranbaxy in March, nearly a year after agreeing to buy it from Japan's Daiichi Sankyo Co Ltd.
The company faces an uphill task in turning around Ranbaxy's business, which has been posting losses for months as all of its manufacturing plants in India are barred from exporting to the United States due to quality control issues.
Sun Pharma said fourth-quarter profit was also hurt by supply constraints related to resolving issues raised by the U.S. Food and Drug Administration at its Halol manufacturing plant in western India.
The steps taken to resolve the issues affected the company's supplies in the third quarter as well, but Shanghvi had said in February that he expected them to return to normal in the fourth quarter.
However he said on Friday: "Supplies have not fully normalised and will take some more time to reach optimal levels."
He also said the company continues "to remain opportunistic for acquisitions", especially businesses that are "well-managed".
"Since Ranbaxy continues to take significant time for senior management, we are not looking at buying businesses we would have to spend a lot of time managing."
Shanghvi has previously said speciality areas such as dermatology could be of interest.
Reuters reported in April that Sun Pharma was willing to spend as much as $7 billion on further acquisitions, and was considering buying companies with expertise in developing biosimilars, citing bankers familiar with the company's strategy said.
reuters.com
