Sun Pharma Provides Business Update

Sun Pharmaceutical Industries has provided the following business update.

Following the acquisition of Ranbaxy, the company has embarked on various consolidation initiatives globally to drive future growth and profitability and to enhance long-term shareholder value. These include

• Investing for future — continue to strengthen and build leadership position in key markets and business
segments. As a part of the company's focus towards enhancing share of specialty/branded business and targeting differentiated product offerings, it has recently strengthened its ophthalmology and OTC teams in the US as well as formed a dedicated team for MK-3222, the company's IL-23 anti-body which is currently undergoing Phase-III clinical trials. Sun Pharma will simultaneously continue to explore opportunities to expand its global footprint.

• Profitability — the company's target for the synergy benefits from the Ranbaxy acquisition has increased by 15–20% as compared to our original target of US$ 250 million by FY18. This will be achieved by focusing on overall profitability improvement driven by revenue and procurement synergies, manufacturing rationalization and various additional cost-management measures.

• R&D — the company will continue to allocate significant resources to R&D to strengthen the specialty pipeline including patented products and complex generics. This will mandate increased R&D investments including that for the development of MK-3222.

• cGMP compliance — A key priority is to ensure continued 24x7 cGMP compliance by continuously
enhancing systems, processes and human capabilities to meet global regulatory standards at all our
manufacturing facilities. As a part of this process and to address the cGMP deviations at its Halol
facility, the company has undertaken various remedial measures, which have resulted in supply constraints for some of the products. The company expects this situation to continue for some more time till all the remedial steps at Halol are completed. The remedial action at the Mohali, Dewas, Poanta Sahib and Toansa facilities is on track. Sun Pharma is working towards the fulfilment of the requirements of the US consent decree and will try to expedite the resolution for at least one of these facilities.

• Ranbaxy integration — as a part of the integration process, the company expects to incur certain integration charges in order to generate long-term synergies from this merger. Also, as a part of the integration process, the company may decide to discontinue certain non-strategic businesses. 

• Revenue Growth — post this consolidation, the company believes it will be better placed to pursue higher than industry growth in subsequent years.

However, these measures are likely to adversely impact the overall revenues and profits of the company for FY16 as indicated below:

• Consolidated revenues — to remain flat or show a decline over FY15.
• Consolidated profits — in addition to the above revenue impact, profits may also be adversely impacted due to certain expenses/charges arising out of integration as well as remedial actions.

The above initiatives will help the company revert to a more sustainable growth trajectory post FY16.