Sun Pharma continues to feel effect of Halol plant problems
- India's Sun Pharma continues to feel the effect of regulatory problems at its major Halol plant, the Economic Times reports citing the brokerage firm Jeffries.
- In December, the FDA issued a warning letter to Sun over compliance issues at the Halol facility, noting problems with the factory's sterile enviornment. Sun shares slumped on the warning, as the plant produces injectable products which account for roughly 15% of Sun's U.S. sales.
- In February, managing director Dilip Shanghavi said Sun would seek a re-inspection from the FDA sometime between April and June this year.
For the quarter ending March 2016, Sun reported revenue growth of 21% compared to a year prior. U.S. sales were boosted by Sun's 180-day exclusivity for imatinib (Gleevec), which began in February. Net profit also increased year over year.
Looking at fiscal year 2016 overall, revenue growth was much more muted at 2%. And lower sales estimates for this year surprised investors, according to Livemint.
The Halol plant is a critical piece of Sun Pharma's business. It contributes to between 7% and 8% of Sun's sales, and as much as 15% of US sales. While Jeffries expects the Halol plant's regulatory issues will be sorted by the end of the month, Sun could still feel pressure over the next two to three quarters, reports The Economic Times.
But Sun could also begin to see a benefit from its recent deal with Novartis, in which it acquired 14 prescription brands in Japan for $293 million. Together, the brands earned about $160 million in annual revenue.
- Economic Times of India Sun Pharma's problems to continue for another 2-3 quarters
- Livemint Sun Pharma: Adjusting to the new reality