Margins may be hit on one-off items in EBITDA: Sun Pharma

In an interview to CNBC-TV18, Uday Baldota, VP-investor relations, Sun Pharma, after the announcement of results, explains that apart from the drug Taro's stellar contribution, other business segments also performed well. He also adds that the margins may face pressure as the one-off items that pushed it to 41% may not recur.

Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video. Q: What was the contribution of Taro which helped the company exceed guidance? What is your guidance for FY13?
A: For FY12, Apart from Taro's stellar performance, other business segments have also done quite well. Our emerging market, rest of the world and India businesses have done quite well. Our guidance was 32-34% growth for FY12 and we have achieved about 40%. For the next year, we have guided for 18-20% growth in sales. Q: The international formulations business also surged 31% this time around. What kind of trajectory are you hoping that the business will see in FY13?
A: Though with our international business we are present across several overseas markets, our presence is relatively small and particularly small when compared to the potential in the market.
So, assuming that we continue to get more products and expand our sales force into these markets and if required, look for acquisition opportunities. I think our growth rate in these markets will continue to be above the corporate average. Q: How exactly did Lipodox contribute this quarter and for how long do you think that you can enjoy the benefits of its contribution?
A: Lipodox is included in our US sales business. We haven't calculated the specific contribution for each product as such.
Going forward, I think how much we will supply is clearly unpredictable because largely we are dependent on the need that exists in the US market which is in a way assessed by the USFDA. So, we are ready to supply whatever is required. Q: What about the domestic formulations business because that surprised on the upside quite significantly? It grew 49% on a Y-o-Y basis. What is the trajectory for the domestic market in FY13? Would it show strong growth rate?
A: The 49%- growth rate for the quarter is probably an aberration. We have said that the core business growth in the domestic market for the full year is 20% and if you look at our past record, then typically we have been able to increase our domestic business a bit faster than the market.
And that is something that we will continue to work towards. We don't have a specific growth estimate for the domestic market either for FY13 or beyond. When we say 18-20% growth for the overall business, it includes the growth of all the other businesses as well. Q: A lot of analysts on the street are betting on the Para -4 launch of Lexapro and Eloxatin for growth in volume in FY13. What is the update on that? What kind of progress do you hope to make?
A: Both these products have a specific timeline of launch, depending on either a settlement or depending on court orders. So, by and large, everyone is aware of this and to that extent it has been built into projections. We expect to launch these products in line with whatever timelines have been planned. Q: I would assume it’s the similar case with Prandin generic as well where USFDA approval is expected….
A: Prandin is a bit different because the approval is clearly going to be defined by the USFDA’s timeline. Just to give a comparison, for Oxaliplatin we have the USFDA's approval, though we didn't need it.
We were prevented from selling Oxaliplatin on account of the interpretation of the settlement between Sanofi and Sun. So, to that extent we are not dependent on FDA for approval. For Prandin, we need to wait for an approval before we can launch it in the market. Q: What is the guidance with regards to Caraco and where have the talks have reached?
A: Caraco has continued to work on the remediation process. Unfortunately we don't have a specific date as to when the facility would be approved. We are working towards it, hopefully it will happen sooner than later, but clearly there is no set date. Q: Do you think you would be able to repeat the 41%-level margins posted in FY12 or do you think it could slip below that level in FY13?
A: What we have indicated and investors realise when they look at our business closely, is that there are a few one-off items that have resulted the EBITDA margin rising to 41%.
Going forward, all of these items or atleast some of the important items may not recur. To that extent, there will be pressure on our margins.