Sun Pharma Q3 net nearly doubles

MUMBAI (Reuters) - Sun Pharmaceutical Industries Ltd (SUN.NS), India's top drugmaker by market capitalisation, reported a better-than-expected 91 percent rise in December quarter net profit on robust sales by Israeli unit Taro Pharmaceutical Industries TAROF.PK.

Sales in the U.S. also helped, said the company, which makes generic drugs and provides contract research and manufacturing services.

Sun Pharma's consolidated net profit rose to 6.68 billion rupees in the third quarter ended December 31, from 3.5 billion rupees a year ago.

Analysts estimated the net profit at 5.27 billion rupees, according to Thomson Reuters StarMine data.

Sales rose 37.3 percent to 21.45 billion rupees, it said.

Taro, in which Sun Pharma owns about 67 percent and has made an offer to acquire the company fully, reported a net income of 3.08 billion rupees on a net sales of 7.32 billion rupees in the quarter.

"Business performance is in line with our expectations," Chairman Dilip Shanghvi said in a statement. "We expect the momentum to continue."

The company, however, warned the strong sales and profit growth of Taro might not be sustainable as it was driven by increased selling prices for select products in the U.S.

Valued at $11.34 billion, shares in Sun Pharma closed up were up 2.2 percent at 553.15 rupees on Monday when the Mumbai market rose 0.14 percent.

U.S. SALES SURGE

Sun Pharma, which draws more than half of its revenue from the United States, also benefited from a sharp depreciation in the value of the rupee.

Its U.S. formulations sales rose 47 percent to 10.28 billion rupees in the quarter, when the Indian rupee fell more than 7 percent versus the U.S. dollar.

Its Indian rival Dr Reddy's Laboratories Ltd (REDY.NS) also reported more-than-double sales in North America over the same period while Lupin's business grew 32.4 percent.

Indian drugmakers, which account for about a third of U.S. applications for approval to sell generics, are expected to add$2 billion to $2.5 billion in U.S. sales in the next five years, doubling their revenue the country.

Drugs worth more than $140 billion are likely to go off patent in the next five years.

In the next few years, Sun Pharma, along with Ranbaxy Laboratories (RANB.NS), Dr Reddy's Laboratories and Lupin will compete for a host of big-ticket drugs losing patent protection.

These include Forest's (FRX.N) Alzheimer's drug Namenda, anti-depressant Lexapro, and the blood clot drug Plavix, sold jointly by Bristol-Myers Squibb Co (BMY.N) and Sanofi (SASY.PA).

Sun Pharma's Indian formulations business grew 17 percent to 6.95 billion rupees compared with an 11 percent rise for Dr Reddy's and 29.3 percent for Lupin.

"Although the last two quarters were kind of an aberration, Taro will continue to be the growth driver for the company," said Siddhant Khandekar, analyst at ICICI Direct in Mumbai.

The Mumbai-based drugmaker's operating margin was at a healthy 40 percent.

"Considering the profitability, the stock will remain at a high valuation trajectory in the future."

(Reporting by Kaustubh Kulkarni; Editing by Rajesh Pandathil)