India's largest drug-maker Sun Pharmaceutical Industries Ltd reported a 30% slump in quarterly profit on Saturday, 7 November, as sales in most of its markets fell and costs related to fixing compliance issues continued to hurt.
In the company's largest market, the United States, Sun Pharma's sales in the quarter ended September were down 28%, which the company attributed mainly to increasing competition and a supply crunch at its Halol manufacturing plant in India.
"Halol" was a key contributor to Sun Pharma's sales, but in September, the US Food and Drug Administration (FDA) outlined a number of problems with manufacturing processes, and the company has since been working on remediating those.
However, its profit has been hit for a few quarters as it had to restrict supply, and has not been getting US approvals to launch any product made at the Halol plant.
The company's Managing Director Dilip Shanghvi sought to assure analysts on a conference call on Saturday evening that remediation efforts were on track, though they aren't yet complete, so the USFDA has not been invited for a re-inspection.
"We are keeping (the FDA) updated on the progress at the agreed frequency. I think the things we have promised or assured the FDA, we are addressing," he said. The company has not received any feedback from the FDA, he added.
Halol is one of several Sun Pharma plants undergoing remediation. Five of its other plants â€” most of which it got as part of its acquisition of Ranbaxy Laboratories Ltd last year â€” are under an FDA import ban ever since the agency found a series of quality control issues at the plants.
Shanghvi said the "full value" of the Ranbaxy deal would be realised by 2018.
Apart from generics, the company is developing a drug to treat "psoriasis", which is in Phase 3 clinical trials and expected to be filed for US approval in 2017.
Sun Pharma reported a July-September net profit of Rs 1,107 crore ($167.4 million), down from Rs 1,572 crore a year earlier. Analysts, on average, were expecting Rs 1,308 crore, according to Thomson Reuters data.
Total revenue was down 15% as sales across the countries it operates in fell. India was the only exception, where sales rose a marginal 1%.
The company said currency volatilities and a decision to reduce its presence in some less-profitable areas hurt its sales in emerging and other markets during the quarter.