Sun Pharma does well, but Pfizer settlement puts it in red

Despite a 56 per cent rise in operating profit, Sun Pharmaceutical Industries has ended up with a net loss of Rs1,276.10 crore for the quarter ended 30 June 2013, on account of a payment for patent litigation settlement with Pfizer in the US.

The company had posted a net profit of Rs795.55 crore for the same period in the previous fiscal.

During the quarter, the company provided Rs2,517.41 crore (previous year Rs583.58 crore) as amount payable in terms of the settlement agreement entered on 11 June 2013 with Pfizer, Wyeth and Nycomed GmbH with respect to patent infringement litigation related to generic versions of 'Protonix'.

Excluding the onetime settlement charge, Sun, India's largest pharmaceutical company by market value, posted a 56 per cent rise in profit as sales of its generic drugs in the US climbed.

Profit before the one-time payment to Pfizer was Rs1,241 crore in the quarter ended June, compared with Rs796 crore a year earlier, the Mumbai-based Sun said.

Dilip Shanghvi, managing director of Sun Pharma, said all the company's businesses continued to perform in line with expectations.

''We remain focused on strengthening our existing businesses and developing a differentiated and specialty driven product basket,'' said Shanghvi, adding that the company will continue to review (inorganic) opportunities to expand and strengthen global footprint.

The company also said that it has completed the process of transferring its domestic formulations business to Sun Pharmaceutical Laboratories, a wholly owned subsidiary. Analysts said excluding one-time payment, which was expected, the sales, margins and profits have all beaten street estimates.

Sales increased 31 per cent to Rs3,482 crore in the three months ended June from a year earlier, Sun said.

Sales of finished dosages in the US grew 28 per cent to $364 million in the first quarter from a year earlier, it said.

Overseas sales accounted for 57 per cent of Sun's total revenue in the year ended in March 2011.

On the tax rate front, Shanghvi said it was on the lower side compared to the initial assessment. ''We expect overall tax rate for fiscal 2014 to be around 15 per cent,'' he said during an analyst call.