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Sun Pharma Expects Ranbaxy Costs to Hit FY16 Revenue

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Sun Pharma Expects Ranbaxy Costs to Hit FY16 Revenue
Mumbai: Sun Pharmaceutical Industries Ltd, India's largest drug maker, said on Monday that its revenue in fiscal year 2016 would be flat at best as it struggles to fix manufacturing problems at Ranbaxy Laboratories, which it bought last year.

The company might also decide to shed some low-margin businesses that it believes don't hold long-term value, it said.

"We have evaluated two to three businesses and we are thinking which one to divest," Sun Pharma's billionaire founder Dilip Shanghvi told analysts on a conference call.

The efforts are part of Sun Pharma's integration of Ranbaxy, which it bought for $3.2 billion last year betting to fix manufacturing issues which have led Ranbaxy's India plants to be barred from exporting to its largest market, the United States.

The plans will help Sun Pharma "revert to a more sustainable growth trajectory" after fiscal year 2016, it said in a statement.

Remedial actions at Ranbaxy plants are "on track", Sun Pharma said, adding it would "try to expedite the resolution for at least one of these facilities". It did not give a timeline.

Most related costs will be one-off, Mr Shanghvi said on the call.

Sun Pharma has been facing supply constraints due to a ban on its own Halol plant as well, and said it expected that would continue "for some more time till all the remedial steps at Halol are completed".

Synergy benefits from the Ranbaxy deal are now expected to be 15 to 20 per cent more than the company's original target of $250 million by 2018, Sun Pharma said in a statement.
© Thomson Reuters 2015

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