Taro: Sales Strong Despite Sun Fight
Despite facing legal costs associated with its terminated merger agreement with Sun Pharmaceutical, Israeli drugmaker Taro Pharmaceutical has reported gross profit of about $91.5 million for the first half of the year.
For the six months ending June 30, Taro estimates that it had net sales of roughly $166 million, operating income of about $29.2 million and net income of roughly $20.6 million.
The net income nearly matches the $21.1 million the company achieved during all of 2007, Barrie Levitt, Taro’s chairman, said. “Results for the first two quarters indicate dramatic financial and operational improvements and show that the turnaround, to which we referred several months ago, is clearly taking place,” he added.
Taro noted that its success came despite having to spend roughly $10 million to maintain its Irish facility, as well as pay professional and legal fees associated with the termination of a merger agreement with Indian drugmaker Sun.
Since May, the two companies have been involved in a dispute over whether Taro can terminate the merger agreement because of its improved financial situation. Taro also wants to sell its Irish operation, an action to which Sun objects.
Sun Chairman Dilip Shanghvi says in a letter he “will not stand by idly” if Taro pursues the sale. Because Taro knows the strategic importance of the Irish facility, Sun regards the attempt to divest the operation as part of an effort to discourage the merger, he says.If the divestiture moves forward, Shanghvi says Sun will hold Taro’s directors liable for breach of fiduciary or other duties.