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Sun Pharma in focus: Price erosion, acquisitions hurt Taro's operating performance

Sun Pharma in focus: Price erosion, acquisitions hurt Taro's operating performance

Sun Pharma in focus: Price erosion, acquisitions hurt Taro's operating performance
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By Hormaz Fatakia  Jan 25, 2023 8:09:32 AM IST (Updated)

The company returned to profitability on a sequential basis after a $2.8 million net loss in the prior quarter.

Sun Pharmaceutical Ltd.'s US unit Taro Pharma reported results for the December quarter where it lost nearly all of its operating profit as it continues to experience pricing pressure, particularly in the US generics business.

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Taro reported $139.2 million in revenue for the December quarter, which is flat compared to the year-ago period. The company's net income also fell 72 percent year-on-year to $7.3 million from $26.3 million last year. However, on a sequential basis, Taro returned to profitability after a $2.8 million loss in the previous quarter.
Sales were also higher on a sequential basis after falling to the lowest in 10 quarters during the September period.
The company's operating income fell to $1.3 million from $37 million during the same period last year while margin contracted 2,600 basis points to 1 percent from 27 percent.
Taro attributed the weak operating performance to the price erosion and the ongoing impact associated with its recent acquisition.
In February this year, Taro announced the completion of the Alchemee acquisition for $90 million, adding the company's business and assets, including the Proactiv brand, into its portfolio.
Proactiv is the leading acne routine in the US and has been in the market for over two decades.
Brokerage firm Macquarie called Taro's results an all-round beat and also termed its balance sheet to be strong.
The company ended the quarter with cash and equivalents worth $1.2 billion on its books.
Shares of Taro Pharma ended 2.1 percent higher in the US.
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