Sun Pharmaceutical Industries: March Quarter Result Analysis

India's largest drug maker by market cap, Sun Pharmaceutical Industries' have come out with robust results for the fourth quarter ended March 31, 2014. On a consolidated basis, the net profit of the company has grown by 56.9% on YoY basis to stand at Rs 1,587 crore which is much ahead of the street expectations. The jump in the bottomline can be attributed to higher domestic as well as US revenues.

Consolidated total income rose 31.5% on YoY basis Rs 4,058 crore in the quarter ended March 2014. Sun Branded generic sales in India grew 21% to Rs 947 crore and US finished dosage sales jumped 22% to USD 403 million during the same period while international formulation sales outside US were flat at USD 72 million compared to same quarter last year.

The company says overall international revenues accounted for more than 75% of total revenues for the quarter. Operating profit or EBITDA was up 41.2% on Y-o-Y to Rs 1,801 crore and margin expanded 310 basis points to 44.4% in the quarter gone by. The company expects its R&D spending to be at 6% - 8% of revenues. The company has targeted 25 ANDA filings in US and capex of Rs 900 crore for FY15. 

Consolidated R&D expense for Q4 FY14 was Rs. 308 crores, or 7.6% of sales. For full year FY14, R&D spend was Rs. 1,042 crores at 6.5% of sales. In the fourth quarter, ANDA for 10 products were filed. After counting these, and adjusting for filings that were dropped, cumulatively ANDAs for 478 products have been filed with the USFDA (as on March 31, 2014). ANDAs for 4 products received approvals in the fourth quarter, taking the total number of approvals to 344 (as on March 31, 2014). ANDAs for 134 products now await USFDA approval, including 7 tentative approvals. The total number of patent applications submitted now stands at 573 with 346 patents granted so far. 

Guidance for FY15 

Company has given consolidated revenue growth guidance of 13-15% for FY15, R&D spending at 6-8% of revenues, 25 ANDA filings targeted in US and capex of Rs. 900 crores. The guidance takes in to account the higher base of FY14 as well the risks associated with increase in competition for some products. Guidance is at constant exchange rate and excludes the impact of the proposed acquisition of Ranbaxy pending the deal closure.