10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 1-35144

Sagent Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	98-0536317
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1901 N. Roselle Road, Suite 700 Schaumburg, Illinois	60195
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (847) 908-1600

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At April 30, 2014, there were 31,865,070 shares of the registrant’s common stock outstanding.

Sagent Pharmaceuticals, Inc.

Table of Contents

		Page No.
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets at March 31, 2014 and December 31, 2013		3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2014 and 2013		4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March  31, 2014 and 2013		5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2014 and 2013		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		23
Item 4.	Controls and Procedures		24
PART II – OTHER INFORMATION			25
Item 1.	Legal Proceedings		25
Item 1A.	Risk Factors		25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		25
Item 3.	Defaults Upon Senior Securities		25
Item 4.	Mine Safety Disclosures		25
Item 5.	Other Information		26
Item 6.	Exhibits		26
	Signature		27

In this report, “Sagent,” “we,” “us,” “our” and the “Company” refers to Sagent Pharmaceuticals, Inc. and subsidiaries, and “Common Stock” refers to Sagent’s common stock, $0.01 par value per share.

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Sagent Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

	March 31, 2014			December 31, 2013
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	25,738		$	42,332
Short-term investments		113,931			113,810
Accounts receivable, net of chargebacks and other deductions		33,204			23,033
Inventories, net		44,179			46,481
Due from related party		3,385			3,644
Prepaid expenses and other current assets		6,615			6,491
Total current assets		227,052			235,791
Property, plant, and equipment, net		56,693			57,684
Investment in joint ventures		2,344			2,063
Goodwill		6,038			6,038
Intangible assets, net		9,005			8,326
Other assets		282			306
Total assets	$	301,414		$	310,208
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	21,835		$	24,010
Due to related party		3,790			3,129
Accrued profit sharing		8,448			8,740
Accrued liabilities		11,345			13,931
Current portion of deferred purchase consideration		3,420			3,381
Current portion of long-term debt		—			10,333
Total current liabilities		48,838			63,524
Long term liabilities:
Long-term portion of deferred purchase consideration		8,425			8,329
Other long-term liabilities		2,080			2,329
Total liabilities		59,343			74,182
Stockholders’ equity:
Common stock—$0.01 par value, 100,000,000 authorized, and 31,863,440 and 31,789,348 outstanding at March 31, 2014 and December 31, 2013, respectively		319			318
Additional paid-in capital		350,624			349,278
Accumulated other comprehensive income		66			487
Accumulated deficit		(108,938	)		(114,057	)
Total stockholders’ equity		242,071			236,026
Total liabilities and stockholders’ equity	$	301,414		$	310,208

See accompanying notes to condensed consolidated financial statements.

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Sagent Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

	Three months ended March 31,
	2014			2013
Net revenue	$	70,869		$	60,211
Cost of sales		50,485			41,753
Gross profit		20,384			18,458
Operating expenses:
Product development		4,020			4,261
Selling, general and administrative		10,013			8,867
Equity in net (income) loss of joint ventures		(281	)		443
Total operating expenses		13,752			13,571
Termination fee		—			5,000
Income from operations		6,632			9,887
Interest income and other		(86	)		16
Interest expense		(213	)		(65	)
Income before income taxes		6,333			9,838
Provision for income taxes		1,214			—
Net income	$	5,119		$	9,838
Net income per common share:
Basic	$	0.16		$	0.35
Diluted	$	0.16		$	0.34
Weighted-average of shares used to compute net income per common share:
Basic		31,814			28,135
Diluted		32,614			28,746

See accompanying notes to condensed consolidated financial statements.

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Sagent Pharmaceuticals, Inc.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(Unaudited)

	Three months ended March 31,
	2014			2013
Net income	$	5,119		$	9,838
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		(436	)		31
Unrealized gains (losses) on available for sale securities		15			(59	)
Total other comprehensive income (loss), net of tax		(421	)		(28	)
Comprehensive income	$	4,698		$	9,810

See accompanying notes to condensed consolidated financial statements

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Sagent Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three months ended March 31,
	2014			2013
Cash flows from operating activities
Net income	$	5,119		$	9,838
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		1,750			1,274
Stock-based compensation		1,196			2,077
Equity in net (income) loss of joint ventures		(281	)		443
Dividends from unconsolidated joint ventures		—			926
Changes in operating assets and liabilities:
Accounts receivable, net		(10,172	)		(4,233	)
Inventories, net		2,272			(2,667	)
Prepaid expenses and other current assets		(129	)		(247	)
Due from related party		259			(3,292	)
Accounts payable and other accrued liabilities		(4,409	)		2,780
Net cash (used in) provided by operating activities		(4,395	)		6,899
Cash flows from investing activities
Capital expenditures		(556	)		(92	)
Investments in unconsolidated joint ventures		—			(11	)
Purchases of investments		(21,784	)		(99,648	)
Sale of investments		21,250			93,200
Purchase of product rights		(989	)		(100	)
Net cash used in investing activities		(2,079	)		(6,651	)
Cash flows from financing activities
Repayment of long-term debt		(10,324	)		—
Proceeds from issuance of common stock, net of issuance costs		149			183
Net cash (used in) provided by financing activities		(10,175	)		183
Effect of exchange rate movements in cash		55			—
Net (decrease) increase in cash and cash equivalents		(16,594	)		431
Cash and cash equivalents, at beginning of period		42,332			27,687
Cash and cash equivalents, at end of period	$	25,738		$	28,118

See accompanying notes to condensed consolidated financial statements

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Sagent Pharmaceuticals, Inc.

Notes to Condensed Consolidated Financial Statements

(in thousands, except for share and per share information)

(Unaudited)

Note 1. Basis of presentation:

Our interim condensed consolidated financial statements are unaudited. We prepared the condensed consolidated financial statements following rules for interim reporting as prescribed by the U.S. Securities and Exchange Commission (“SEC”). As permitted under those rules, we have condensed or omitted a number of footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). It is management’s opinion that these financial statements include all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of our financial position, operating results and cash flows. Operating results for any interim period are not necessarily indicative of future or annual results.

The condensed consolidated financial statements include Sagent as well as our wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. We account for our investment in Sagent Agila LLC (formerly Sagent Strides LLC) using the equity method of accounting, as our interest in the entity provides for joint financial and operational control.

In June 2013, we acquired the remaining 50% interest in Kanghong Sagent (Chengdu) Pharmaceutical Co., Ltd. (“KSCP”), which we subsequently renamed Sagent (China) Pharmaceuticals Co., Ltd. (“SCP”), from our former joint venture partner. Accordingly, commencing as of June 30, 2013, our condensed consolidated financial statements include SCP as a wholly-owned subsidiary. Prior to the acquisition, we accounted for our investment in KSCP using the equity method of accounting, as our interest in the entity provided for joint financial and operational control.

Certain amounts previously included in accounts payable have been reclassified to accrued liabilities to conform to the current period presentation.

You should read these statements in conjunction with our consolidated financial statements and related notes for the year ended December 31, 2013, included in our most recent Annual Report on Form 10-K filed with the SEC on March 7, 2014.

Note 2. Acquisitions:

Remaining equity interest of SCP

On June 4, 2013, we acquired Chengdu Kanghong Pharmaceuticals (Group) Co. Ltd (“CKT”) 50% equity interest in KSCP for $25,000, payable in installments through September 2015. We acquired net tangible assets consisting primarily of cash of $2,704, inventory of $2,396, prepaid assets of $196, and property, plant and equipment of $56,654, net of assumed liabilities, primarily long term bank loans of $19,095 and accrued compensation and other liabilities of $8,954. We recorded goodwill of $6,038 due to the synergies achieved by having control over the products and manufacturing at the SCP facility.

Product rights acquisitions

On December 12, 2013, we acquired two products, Mesna and Acetylcysteine, owned by Sagent Agila in an agreement with Mylan Inc. The total fair value of consideration transferred was $3,400, consisting of $3,200 of cash and $200 of contingent consideration.

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The following unaudited pro forma financial information reflects the consolidated results of operations of Sagent as if these acquisitions had taken place on January 1, 2013. The pro forma information includes acquisition and integration expenses. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date.

Condensed consolidated statement of operations information	Three months ended March 31, 2013
Net revenues	$	60,211
Net income		13,628
Diluted income per common share	$	0.47

Note 3. Investments:

Our investments at March 31, 2014 were comprised of the following:

	Cost basis		Unrealized gains		Unrealized losses			Recorded basis		Cash and cash equivalents		Short term investments
Assets
Cash	$	14,156	$	—	$	—		$	14,156	$	14,156	$	—
Money market funds		11,582		—		—			11,582		11,582		—
Commercial paper		17,097		—		(2	)		17,095		—		17,095
Corporate bonds and notes		96,828		57		(49	)		96,836		—		96,836
	$	139,663	$	57	$	(51	)	$	139,669	$	25,738	$	113,931

Investments with continuous unrealized losses for less than twelve months and their related fair values at March 31, 2014 were as follows:

	Fair value		Unrealized losses
Commercial paper	$	9,395	$	(2	)
Corporate bonds and notes		39,824		(49	)
	$	49,219	$	(51	)

Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Because we do not currently intend to sell these investments, and it is not more likely than not that we will be required to sell our investments before recovery of their amortized cost basis, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at March 31, 2014.

The original cost and estimated current fair value of our fixed-income securities at March 31, 2014 are set forth below.

	Cost basis		Estimated fair value
Due in one year or less	$	62,948	$	62,966
Due between one and five years		50,977		50,965
	$	113,925	$	113,931

Note 4. Inventories:

Inventories at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014								December 31, 2013
	Approved			Pending regulatory approval		Inventory			Approved			Pending regulatory approval			Inventory
Finished goods	$	41,849		$	—	$	41,849		$	44,510		$	1,437		$	45,947
Raw materials		3,907			2,264		6,171			5,614			19			5,633
Inventory reserve		(3,841	)		—		(3,841	)		(3,662	)		(1,437	)		(5,099	)
	$	41,915		$	2,264	$	44,179		$	46,462		$	19		$	46,481

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Note 5. Property, plant and equipment

Property, plant and equipment at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014			December 31, 2013
Land and land improvements	$	2,215		$	2,235
Buildings and improvements		19,520			19,696
Machinery, equipment, furniture and fixtures		38,077			38,000
Construction in process		619			460
		60,431			60,391
Less accumulated depreciation		(3,738	)		(2,707	)
	$	56,693		$	57,684

Depreciation expense was $1,041 and $64 for the three months ending March 31, 2014 and 2013, respectively.

Note 6. Goodwill and Intangible assets, net:

Goodwill at March 31, 2014 and December 31, 2013 was $6,038 and there were no goodwill impairment losses for the three months ended March 31, 2014 and 2013, respectively.

Intangible assets at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014							December 31, 2013
	Gross carrying amount		Accumulated amortization			Intangible assets, net		Gross carrying amount		Accumulated amortization			Intangible assets, net
Product licensing rights	$	5,992	$	(2,312	)	$	3,680	$	5,941	$	(2,087	)	$	3,854
Product development rights		4,105		—			4,105		3,252		—			3,252
Total definite-lived intangible assets	$	10,097	$	(2,312	)	$	7,785	$	9,193	$	(2,087	)	$	7,106
In-process research and development (IPR&D)	$	1,220	$	—		$	1,220	$	1,220	$	—		$	1,220
Total intangible assets	$	11,317	$	(2,312	)	$	9,005	$	10,413	$	(2,087	)	$	8,326

Movements in intangible assets were due to the following:

	Product licensing rights			Product development rights			IPR&D
December 31, 2013	$	3,854		$	3,252		$	1,220
Purchase of product rights		51			938			—
Amortization of product rights		(225	)		(85	)		—
March 31, 2014	$	3,680		$	4,105		$	1,220

The weighted-average period prior to the next extension or renewal for the 21 products comprising our product licensing rights intangible asset was 70 months at March 31, 2014.

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We currently estimate amortization expense over each of the next five years as follows:

For the year ending:	Amortization expense
March 31, 2015	$	4,611
March 31, 2016		786
March 31, 2017		491
March 31, 2018		481
March 31, 2019		437

Note 7. Investment in Sagent Agila:

Changes in our investment in Sagent Agila during the three months ended March 31, 2014 were as follows:

Investment in Sagent Agila at January 1, 2014	$	2,063
Equity in net income of Sagent Agila		281
Investment in Sagent Agila at March 31, 2014	$	2,344

Condensed statement of operations information of Sagent Agila is presented below.

	Three months ended March 31,
Condensed statement of operations information	2014		2013
Net revenues	$	1,330	$	5,629
Gross profit		600		1,444
Net income		562		1,083

Note 8. Debt:

SCP credit facilities

In connection with the acquisition of the remaining 50% equity interest in SCP in June 2013, we assumed two loan contracts with the Agricultural Bank of China Ltd. in the amount of RMB 37,000 ($6,014) and RMB 83,000 ($13,491) originally entered into in June 2011 and August 2010, respectively, (the “ABC Loans”) each with a five year term. Amounts outstanding under the ABC Loans bore an interest rate equal to the benchmark lending interest rate published by the People’s Bank of China, subject to adjustment every three months. As the interest rate resets on a quarterly basis, the fair value of our long-term debt approximated its carrying value. On January 2, 2014, we repaid in full the then-outstanding balance of the ABC Loans, totaling RMB 63,000 ($10,333). Upon prepayment of the ABC Loans, the loan contracts were terminated. No early termination fees were incurred as part of the prepayment of the ABC Loans.

Note 9. Accrued liabilities:

Accrued liabilities at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014		December 31, 2013
Payroll and employee benefits	$	3,440	$	6,224
Sales and marketing		5,448		5,305
Taxes payable		811		895
Other accrued liabilities		1,646		1,507
	$	11,345	$	13,931

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Note 10. Fair value measurements:

Assets measured at fair value on a recurring basis as of March 31, 2014 consisted of the following:

	Total fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	11,582	$	11,582	$	—	$	—
Corporate bonds and notes		96,836		—		96,836		—
Commercial paper		17,095		—		17,095		—
Short-term investments	$	113,931	$	—	$	113,931	$	—
Total assets	$	125,513	$	11,582	$	113,931	$	—
Liabilities
Contingent purchase consideration	$	200	$	—	$	—	$	200

The fair value of our Level 2 investments is based on a combination of quoted market prices of similar securities and matrix pricing provided by third-party pricing services utilizing securities of similar quality and maturity. The fair value of our Level 3 contingent consideration is based upon a probability weighting approach that considered the possible outcomes based on assumptions related to the timing and probability of the product approval date.

Assets measured at fair value on a recurring basis as of December 31, 2013 consisted of the following:

	Total fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	11,592	$	11,592	$	—	$	—
Corporate bonds and notes		92,516		—		92,516		—
Commercial paper		21,294		—		21,294		—
Short-term investments	$	113,810	$	—	$	113,810	$	—
Total assets	$	125,402	$	11,592	$	113,810	$	—
Liabilities
Contingent purchase consideration	$	200	$	—	$	—	$	200

There were no transfers of assets between Level 1, Level 2 or Level 3 during the periods presented.

Changes in the fair value of our contingent purchase consideration measured using significant unobservable inputs (Level 3), during the three months ending March 31, 2014 were as follows:

Balance at January 1, 2014	$	200
Issuance of contingent purchase consideration		—
Change in fair value of contingent purchase consideration		—
Payment of contingent purchase consideration		—
Balance at March 31, 2014	$	200

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Note 11. Accumulated other comprehensive income:

Accumulated other comprehensive income at March 31, 2014 and December 31, 2013 is comprised of the following:

	March 31, 2014		December 31, 2013
Currency translation adjustment, net of tax	$	60	$	496
Unrealized gains (losses) on available for sale securities, net of tax		6		(9	)
Total accumulated other comprehensive income	$	66	$	487

There were no amounts reclassified from accumulated other comprehensive income during the three months ended March 31, 2014.

Note 12. Earnings per share:

Basic earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Because of their anti-dilutive effect, 1,196,646 and 735,843 common share equivalents, comprised of restricted stock and unexercised stock options, have been excluded from the calculation of diluted earnings per share for the periods ended March 31, 2014 and 2013, respectively.

The table below presents the computation of basic and diluted earnings per share for the three months ended March 31, 2014 and 2013:

	Three months ended March 31,
	2014		2013
Basic and dilutive numerator:
Net income, as reported	$	5,119	$	9,838
Denominator:
Weighted-average common shares outstanding - basic (in thousands)		31,814		28,135
Net effect of dilutive securities:
Stock options and restricted stock		800		611
Weighted-average common shares outstanding - diluted (in thousands)		32,614		28,746
Net income per common share (basic)	$	0.16	$	0.35
Net income per common share (diluted)	$	0.16	$	0.34

Note 13. Stock-based compensation:

We granted 251,058 stock options, 18,600 restricted stock units and 47,714 restricted stock awards during the three months ended March 31, 2014. We granted 370,024 stock options, 12,156 restricted stock units and 41,702 restricted stock awards during the three months ended March 31, 2013. There were 54,570 and 25,043 stock options exercised during the three months ended March 31, 2014 and 2013, respectively, with an aggregate intrinsic value of $957 and $236, respectively.

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Note 14. Net revenue by product:

Net revenue by therapeutic class is as follows:

	Three months ended March 31,
Therapeutic class:	2014		2013
Anti-infective	$	27,148	$	22,179
Critical care		21,585		19,088
Oncology		22,136		18,944
	$	70,869	$	60,211

Note 15. Related party transactions:

As of March 31, 2014 and December 31, 2013, respectively, we had a receivable of $3,385 and $3,644 from Sagent Agila LLC, which is expected to offset future profit-sharing payments. As of March 31, 2014 and December 31, 2013, respectively, we had a payable of $3,790 and $3,129 to Sagent Agila LLC, principally for the acquisition of inventory and amounts due under profit-sharing arrangements.

Note 16. Income Taxes:

Valuation Allowance

We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets. We establish valuation allowances if it is not likely we will realize our deferred income tax assets. In making this determination, we consider all available positive and negative evidence and make certain assumptions. We consider, among other things, our deferred tax liabilities, the overall business environment, our historical financial results, our industry’s historically cyclical financial results and potential current and future tax planning strategies.

We recorded a full valuation allowance in 2007 due to our cumulative loss position at that time. At March 31, 2014, we had approximately a $17,000 valuation allowance established against our domestic deferred income tax assets, which represents a full valuation allowance against our net domestic deferred income tax assets.

During the first quarter of 2014, we moved from a cumulative loss position over the previous three years to a cumulative income position for the first time since we established the full valuation allowance. While this is positive information, we have concluded as of March 31, 2014 that the valuation allowance was still needed on our net deferred tax assets based upon the weight of the factors described above, especially considering our history that included six consecutive years of losses. We continue to evaluate our cumulative income position and income trend as well as our future projections of sustained profitability. We evaluate whether this profitability trend constitutes sufficient positive evidence to support a reversal of our valuation allowance (in full or in part). If this profitability trend continues for the remainder of 2014 and this level of profitability is projected in the future, we anticipate that we may reverse substantially all of our domestic valuation allowance as early as the end of 2014.

2014 tax provision

Our provision for income taxes for the three months ended March 31, 2014 was $1,214. Of our total provision for income taxes, $885 represents the alternative minimum tax (“AMT”) payable in the United States for 2014 and income taxes payable in certain states where we do not have available loss carryforwards. As we have recorded a full valuation allowance against our deferred tax assets, our AMT payable is recorded as tax expense. The remaining provision for income taxes, $329, relates to the correction of state tax expense that was not recorded during the year ended December 31, 2013.

Note 17. Actavis contract termination:

In March 2013, we agreed with Actavis, LLC (“Actavis”), a contract manufacturer of the Company, to terminate our development, manufacturing and supply agreement, effective December 31, 2014. As consideration for the termination of the agreement, we received a greater percentage of the net profit from sales of products during the remaining term of the agreement and a one-time, non-refundable payment of $5,000, which is not subject to future performance. This payment is included in Termination fee in our Condensed Consolidated Statement of Operations for the three months ended March 31, 2013.

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Note 18. Commitments and contingencies:

Litigation

From time to time, we are subject to claims and litigation arising in the ordinary course of business. These claims may include assertions that our products infringe existing patents and claims that the use of our products has caused personal injuries. We intend to vigorously defend any such litigation that may arise under all defenses that would be available to us.

Zoledronic Acid (Generic versions of Zometa^® and Reclast^®). On February 20, 2013, Novartis Pharmaceuticals Corporation (“Novartis”) sued the Company and several other defendants in the United States District Court for the District of New Jersey (Novartis Pharmaceuticals Corporation v. Actavis, LLC, et. al., Case No. 13-cv-1028), alleging, among other things, that sales of the Company’s (i) zoledronic acid premix bag (4mg/100ml), made by ACS Dobfar Info S.A. (“Info”), also a defendant, a generic version of Novartis’ Zometa^® ready to use bottle, would infringe U.S. Patent No. 7,932,241 (the “241 Patent”) and U.S. Patent No. 8,324,189 (the “189 Patent”) and (ii) zoledronic acid premix bag (5mg/100ml), also made by Info, a generic version of Novartis’ Reclast^® ready to use bottle, would infringe U.S. Patent No. 8,052,987 and the 241 Patent, and (iii) zoledronic acid vial (4mg/5ml), made by Actavis LLC, also a defendant, a generic version of Novartis’ Zometa^® vial, would infringe the 189 Patent. On March 1, 2013, the District Court denied Novartis’ request for a temporary restraining order and a preliminary injunction against the Company and the other defendants, including Actavis and Info.

On March 6, 2013, the Company, began selling Actavis’ zoledronic acid vial, the generic version of Zometa^® and as of August 27, 2013 and October 1, 2013, the Company began selling zoledronic acid premix bags in 4mg/100ml and5mg/100ml presentations, respectively. The Company believes it has substantial meritorious defenses to the case, and the Company has sold and will continue to sell these products. While an estimate of the potential loss resulting from an adverse final determination that one of the patents in suit is valid and infringed cannot currently be made as specific monetary damages have not been asserted, an adverse final determination could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

At this time, there are no other proceedings of which we are aware that are considered likely to have a material adverse effect on the consolidated financial position or results of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our condensed consolidated financial statements included elsewhere in this report and with our audited financial statements and the notes found in our most recent Annual Report on Form 10-K filed with the SEC on March 7, 2014. Unless otherwise noted, all dollar amounts are in thousands.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “will,” “should,” “could have,” “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results, our plans and objectives for future operations, growth or initiatives, strategies, our product pipeline and anticipated product approvals or the expected outcome or impact of pending or threatened litigation are forward-looking statements. In addition, this report contains forward-looking statements regarding the adequacy of our current cash balances to fund our ongoing operations; our utilization of our net operating loss carryforwards; our ability to realize the expected benefits from our acquisition of and investment in our China subsidiary; and the additional investments required to be made in our China subsidiary to achieve its manufacturing potential.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to a number of risks and uncertainties, and the cautionary statements set forth below, as well as elsewhere in this Quarterly Report on Form 10-Q, and those contained in Item 1A under the heading “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC on March 7, 2014, identify important factors that could cause actual results to differ materially from those indicated by our forward-looking statements. Such factors, include, but are not limited to:

• we rely on our business partners for the manufacture of substantially all of our products, and if our business partners fail to supply us with high-quality active pharmaceutical ingredient (“API”) or finished products in the quantities we require on a timely basis, sales of our products could be delayed or prevented, our revenues and margins could decline, which could have a material adverse effect on our business, financial condition and results of operations;

• if we or any of our business partners are unable to comply with the quality and regulatory standards applicable to pharmaceutical drug manufacturers, or if approvals of pending applications are delayed as a result of quality or regulatory compliance concerns or merely backlogs at the US Food and Drug Administration (“FDA”), we may be unable to meet the demand for our products, may lose potential revenues and our business, financial condition and results of operations could be materially adversely affected;

• changes in the regulations, enforcement procedures or regulatory policies established by the FDA and other regulatory agencies are expected to increase the costs and time of development of our products and could delay or prevent sales of our products and our revenues could decline and our business, financial condition and results of operations could be materially adversely affected;

• four of our products, heparin, levofloxacin in premix bag and zoledronic acid in both vials and premix bag, represent a significant portion of our net revenues. Each of these products are supplied to us by a single vendor, and both heparin and zoledronic acid vials, and levofloxacin in premix bag and zoledronic acid in premix bag, are manufactured by a single supplier. If the volume or pricing of any of these products declines, or we are unable to satisfy market demand for any of these products, such event could have a material adverse effect on our business, financial position and results of operations;

• we participate in highly competitive markets, dominated by a few large competitors, and if we are unable to compete successfully, our revenues could decline and our business, financial condition and results of operations could be materially adversely affected;

• if we are unable to maintain our group purchasing organizations and distributor relationships, our revenues could decline and our results of operations could be negatively impacted;

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• we rely on a limited number of pharmaceutical wholesalers to distribute our products;

• we depend to a significant degree upon our key personnel, the loss of whom could adversely affect our operations;

• we may be exposed to product liability claims that could cause us to incur significant costs or cease selling some of our products;

• our products may infringe the intellectual property rights of third parties, and we may incur substantial liabilities and may be unable to commercialize products in a profitable manner or at all;

• our business could suffer if reimbursement by government-sponsored or private sector insurance programs for our current or future products is reduced or modified;

• we are subject to risks associated with managing our international network of collaborations, which include business partners and other suppliers of components, API and finished products throughout the world;

• we may never realize the expected benefits from our manufacturing facility in China and it will require substantial capital resources to reach its manufacturing potential and be profitable; and

• we are likely to incur substantial costs associated with both implementation and maintenance of our new enterprise resource planning software and other related applications, and unforeseen problems may arise with the implementation. If the new systems do not perform as originally planned, our business, financial position and results of operations could be adversely affected.

• we may seek to engage in strategic transactions, including the acquisition of products or businesses, that could have a variety of negative consequences, and we may not realize the intended benefits of such transactions.

We derive many of our forward-looking statements from our work in preparing, reviewing and evaluating our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, it is impossible for us to anticipate or accurately calculate the impact of all factors that could affect our actual results. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.

We cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation and do not intend to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Introduction

We are a specialty pharmaceutical company focused on developing, manufacturing, sourcing and marketing injectable pharmaceutical products, which we sell primarily in the United States of America through our highly experienced sales and marketing team. Initially founded in 2006 as Sagent Holding Co., a Cayman Islands company, we reincorporated as Sagent Pharmaceuticals, Inc., a Delaware corporation, in connection with our initial public offering, on April 26, 2011.

With a primary focus on generic injectable pharmaceuticals, which provide customers a lower-cost alternative to branded products when applicable patents have expired or been declared invalid, or when the products are determined not to infringe the patents of others, we offer our customers a broad range of products across anti-infective, oncolytic and critical care indications in a variety of presentations, including single- and multi-dose vials and ready-to-use pre-filled syringes and premix bags. We generally seek to develop injectable products where the form or packaging of the product can be enhanced to improve delivery, product safety or end-user convenience. Our management team includes industry veterans who have served critical functions at other injectable pharmaceutical companies and key customer groups and have long-standing relationships with customers, regulatory agencies, and suppliers. We have rapidly established a growing and diverse product portfolio and product pipeline as a result of our innovative business model. Our model combines an extensive network of international development, sourcing and manufacturing collaborations with our proven and experienced U.S.-based regulatory, quality assurance, business development, project management, and sales and marketing teams.

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Non-GAAP Financial Measures

We report our financial results in accordance with accounting principles generally accepted in the United States (“GAAP”).

Adjusted Gross Profit

We use the non-GAAP financial measure “Adjusted Gross Profit” and corresponding ratios. We define Adjusted Gross Profit as gross profit plus our share of the gross profit earned through our Sagent Agila joint venture which is included in the Equity in net (income) loss of joint ventures line on the consolidated statements of operations. We believe that Adjusted Gross Profit is relevant and useful supplemental information for our investors. Our management believes that the presentation of this non-GAAP financial measure, when considered together with our GAAP financial measures and the reconciliation to the most directly comparable GAAP financial measure, provides a more complete understanding of the factors and trends affecting Sagent than could be obtained absent these disclosures. Management uses Adjusted Gross Profit and corresponding ratios to make operating and strategic decisions and evaluate our performance. We have disclosed this non-GAAP financial measure so that our investors have the same financial data that management uses with the intention of assisting you in making comparisons to our historical operating results and analyzing our underlying performance. Our management believes that Adjusted Gross Profit provides a useful supplemental tool to consistently evaluate the profitability of our products that have profit sharing arrangements. The limitation of this measure is that it includes an item that does not have an impact on gross profit reported in accordance with GAAP. The best way that this limitation can be addressed is by using Adjusted Gross Profit in combination with our GAAP reported gross profit. Because Adjusted Gross Profit calculations may vary among other companies, the Adjusted Gross Profit figures presented below may not be comparable to similarly titled measures used by other companies. Our use of Adjusted Gross Profit is not meant to and should not be considered in isolation or as a substitute for, or superior to, any GAAP financial measure. You should carefully evaluate the following tables reconciling Adjusted Gross Profit to our GAAP reported gross profit for the periods presented (dollars in thousands).

	Three months ended March 31,										% of net revenue, three months ended March 31,
	2014		2013		$ Change			% Change			2014			2013			% Change
Adjusted Gross Profit	$	20,684	$	19,180	$	1,504			8	%		29.2	%		31.9	%		-2.7	%
Sagent portion of gross profit earned by Sagent Agila joint venture		300		722		(422	)		-58	%		0.4	%		1.2	%		-0.8	%
Gross Profit	$	20,384	$	18,458	$	1,926			10	%		28.8	%		30.7	%		-1.9	%

EBITDA and Adjusted EBITDA

We use the non-GAAP financial measures “EBITDA” and “Adjusted EBITDA” and corresponding growth ratios. We define EBITDA as net income less interest expense, net of interest income, provision for income taxes, depreciation and amortization. We define Adjusted EBITDA as net income less interest expense, net of interest income, provision for income taxes, depreciation and amortization, stock-based compensation expense and the equity in net loss of our former KSCP joint venture. We believe that EBITDA and Adjusted EBITDA are relevant and useful supplemental information for our investors. Our management believes that the presentation of these non-GAAP financial measures, when considered together with our GAAP financial measures and the reconciliation to the most directly comparable GAAP financial measures, provides a more complete understanding of the factors and trends affecting Sagent than could be obtained absent these disclosures. Management uses EBITDA, Adjusted EBITDA and corresponding ratios to make operating and strategic decisions and evaluate our performance. We have disclosed these non-GAAP financial measures so that our investors have the same financial data that management uses with the intention of assisting you in making comparisons to our historical operating results and analyzing our underlying performance. Our management believes that EBITDA and Adjusted EBITDA are useful supplemental tools to evaluate the underlying operating performance of the company on an ongoing basis. The limitation of these measures is that they exclude items that have an impact on net income. The best way that these limitations can be addressed is by using EBITDA and Adjusted EBITDA in combination with our GAAP reported net income. Because EBITDA and Adjusted EBITDA calculations may vary among other companies, the EBITDA and Adjusted EBITDA figures presented below may not be comparable to similarly titled measures used by

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other companies. Our use of EBITDA and Adjusted EBITDA is not meant to and should not be considered in isolation or as a substitute for, or superior to, any GAAP financial measure. You should carefully evaluate the following tables reconciling EBITDA and Adjusted EBITDA to our GAAP reported net income for the periods presented (dollars in thousands).

	Three months ended March 31,
	2014		2013		$ Change			% Change
Adjusted EBITDA	$	9,554	$	14,201	$	(4,647	)		-33	%
Stock-based compensation expense		1,196		2,077		(881	)		-42	%
Equity in net loss of KSCP joint venture1		—		984		(984	)		n/m
EBITDA	$	8,358	$	11,140	$	(2,782	)		-25	%
Depreciation and amortization expense2		1,726		1,253		473			38	%
Interest expense, net		299		49		250			510	%
Provision for income taxes		1,214		—		1,214			n/m
Net income	$	5,119	$	9,838	$	(4,719	)		-48	%

¹ In June 2013, we acquired the remaining 50% interest in KSCP from our former joint venture partner. Accordingly, SCP is included in our Condensed Consolidated Statements of Operations as a wholly-owned subsidiary for the three months ended March 31, 2014.

² Amortization expense excludes $24 and $21 of amortization in the three months ended March 31, 2014 and 2013, respectively, related to deferred financing fees, which is included within interest expense and other in our Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013.

Discussion and Analysis

Consolidated results of operations

The following compares our consolidated results of operations for the three months ended March 31, 2014 with those of the three months ended March 31, 2013:

	Three months ended March 31,
	2014			2013			$ change			% change
Net revenue	$	70,869		$	60,211		$	10,658			18	%
Cost of sales		50,485			41,753			8,732			21	%
Gross profit		20,384			18,458			1,926			10	%
Gross profit as % of net revenue		28.8	%		30.7	%
Operating expenses:
Product development		4,020			4,261			(241	)		-6	%
Selling, general and administrative		10,013			8,867			1,146			13	%
Equity in net (income) loss of joint ventures		(281	)		443			(724	)		n/m
Total operating expenses		13,752			13,571			181			1	%
Termination fee		—			5,000			(5,000	)		n/m
Income from operations		6,632			9,887			(3,255	)		-33	%
Interest income and other		(86	)		16			(102	)		n/m
Interest expense		(213	)		(65	)		(148	)		228	%
Income before income taxes		6,333			9,838			(3,505	)		-36	%
Provision for income taxes		1,214			—			1,214			n/m
Net income	$	5,119		$	9,838		$	(4,719	)		-48	%
Net income per common share:
Basic	$	0.16		$	0.35		$	(0.19	)		-54	%
Diluted	$	0.16		$	0.34		$	(0.18	)		-53	%

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Net revenue: Net revenue for the three months ended March 31, 2014 totaled $70.9 million, an increase of $10.7 million, or 18%, as compared to $60.2 million for the three months ended March 31, 2013. The launch of 23 new codes or presentations of ten products since March 31, 2013 contributed $9.7 million of the net revenue increase in the first quarter of 2014. Net revenue for products launched prior to March 31, 2013 increased $1.0 million, or 2%, to $61.2 million in the first quarter of 2014 due to increased demand due to market shortages, partially offset by price declines in zoledronic acid vials, which we launched at market formation in March 2013.

Cost of sales: Cost of goods sold for the three months ended March 31, 2014 totaled $50.5 million, an increase of $8.7 million, or 21%, as compared to $41.8 million for the three months ended March 31, 2013. Gross profit as a percentage of net revenues was 28.8% for the three months ended March 31, 2014 compared to 30.7% for the three months ended March 31, 2013. The decrease in gross profit is primarily due to the impact of $1.5 million of unabsorbed manufacturing costs at our SCP facility. Adjusted Gross Profit as a percentage of net revenue was 29.2% for the three months ended March 31, 2014, and 31.9% for the three months ended March 31, 2013. The decrease in Adjusted Gross Profit is also impacted by the product mix from the Sagent Agila joint venture.

Product development: Product development expense for the three months ended March 31, 2014 totaled $4.0 million, a decrease of $0.2 million, or 6%, as compared to $4.3 million for the three months ended March 31, 2013.

As of March 31, 2014, our new product pipeline included 38 products represented by 64 ANDAs which we had filed, or licensed rights to, that were under review by the FDA and three products represented by ten ANDAs that have been recently approved and were pending commercial launch. We also had an additional 28 products represented by 42 ANDAs under initial development at March 31, 2014.

Selling, general and administrative: Selling, general and administrative expenses for the three months ended March 31, 2014, totaled $10.0 million, an increase of $1.1 million, or 13%, as compared to $8.9 million for the three months ended March 31, 2013. The increase in selling, general and administrative expense was primarily due to $0.9 million of costs associated with our SCP facility. Selling, general and administrative expense as a percentage of net revenue was 14% and 15% for the three months ended March 31, 2014 and 2013, respectively.

Equity in net (income) loss of joint ventures: Equity in net income of joint ventures for the three months ended March 31, 2014 totaled $0.3 million, an increase of $0.7 million as compared to a loss of $0.4 million for the three months ended March 31, 2013. Included in this amount are the following (in thousands of dollars).

	Three Months Ended March 31,
	2014			2013
Sagent Agila LLC – Earnings directly related to the sale of product	$	(300	)	$	(722	)
Sagent Agila LLC – Product development costs		19			181
KSCP – net loss		—			984
Equity in net (income) loss of joint ventures	$	(281	)	$	443

In June 2013, we acquired the remaining 50% interest in KSCP, which we subsequently renamed Sagent (China) Pharmaceuticals Co. Ltd., and, commencing as of September 30, 2013, our condensed consolidated financial statements include SCP as a wholly-owned subsidiary.

Termination fee: Termination fee for 2013 represents the $5.0 million one-time termination fee received in connection with the amendment of the company’s Manufacturing and Supply Agreement with Actavis.

Interest expense: Interest expense for the three months ended March 31, 2014 totaled $0.2 million, an increase of $0.1 million, or 228%, as compared to $0.1 million for the three months ended March 31, 2013.

Provision for income taxes:

We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets. We establish valuation allowances if it is not likely we will realize our deferred income tax assets. In making this determination, we consider all available positive and negative evidence and make certain assumptions. We consider, among other things, our deferred tax liabilities, the overall business environment, our historical financial results, our industry’s historically cyclical financial results and potential current and future tax planning strategies.

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We recorded a full valuation allowance in 2007 due to our cumulative loss position at that time. At March 31, 2014, we had approximately $17 million of valuation allowances established against our domestic deferred income tax assets, which represents a full valuation allowance against our net domestic deferred income tax assets.

During the first quarter of 2014, we moved from a cumulative loss position over the previous three years to a cumulative income position for the first time since we established the full valuation allowance. While this is positive information, we have concluded as of March 31, 2014 that the valuation allowance was still needed on our net deferred tax assets based upon the weight of the factors described above, especially considering our history that included six consecutive years of losses. We continue to evaluate our cumulative income position and income trend as well as our future projections of sustained profitability. We evaluate whether this profitability trend constitutes sufficient positive evidence to support a reversal of our valuation allowance (in full or in part). If this profitability trend continues for the remainder of 2014 and this level of profitability is projected in the future, we anticipate that we may reverse substantially all of our domestic valuation allowance as early as the end of 2014.

Our provision for income taxes for the three months ended March 31, 2014 was $1,214. Of our total provision for income taxes, $885 represents the alternative minimum tax (“AMT”) payable in the United States for 2014 and income taxes payable in certain states where we do not have available loss carryforwards. As we have recorded a full valuation allowance against our deferred tax assets, our AMT payable is recorded as tax expense. The remaining provision for income taxes, $329, relates to the correction of state tax expense that was not recorded during the year ended December 31, 2013.

Net income and diluted net earnings per common share: The net income for the three months ended March 31, 2014 of $5.1 million decreased by $4.7 million, or 48%, from the $9.8 million net income for the three months ended March 31, 2013. Diluted net earnings per common share decreased by $0.18, or 53%. The decrease in diluted net earnings per common share is due to the following factors:

Diluted EPS for the three months ended March 31, 2013	$	0.34
Decrease in operations		(0.14	)
Increase in common shares outstanding		(0.04	)
Diluted EPS for the three months ended March 31, 2014	$	0.16

Liquidity and Capital Resources

Funding Requirements

Our future capital requirements will depend on a number of factors, including the continued commercial success of our existing products, launching the 74 products that are represented by our 37 ANDAs that have been recently approved and are pending commercial launch or are pending approval by the FDA as of March 31, 2014, successfully identifying and sourcing other new product opportunities, manufacturing products at our wholly-owned Chinese manufacturing facility, and business development activity.

Based on our existing business plan, we expect that cash, cash equivalents and short-term investments of approximately $139.7 million as of March 31, 2014, together with borrowings available under our SVB revolving loan facility, including the continued development of our product pipeline, the further payments required in respect of the SCP Acquisition and potential capital expansion at our Chinese facility, for at least the next 12 months. However, we may require additional funds in the event that we change our business plan, pursue additional strategic transactions, including the acquisition of businesses or products, or encounter unexpected developments, including unforeseen competitive conditions within our product markets, changes in the general economic climate, changes in the regulatory environment, the loss of or negative developments affecting key relationships with suppliers, group purchasing organizations or end-user customers or other unexpected developments that may have a material effect on the cash flows or results of operations of our business.

To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or private equity offerings or debt financings, which may not be available to us on terms we consider acceptable or at all. Our ability to raise additional funding, if necessary, is subject to a variety of factors that we cannot predict with certainty, including our future results of operations, our

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relative levels of debt and equity, the volatility and overall condition of the capital markets and the market prices of our securities. Debt financing, if available, may only be available to us on less favorable terms than our existing SVB revolving credit facility, including higher interest rates or greater exposure to interest rate risk. In addition, the terms of any financing may adversely affect the holdings or rights of our stockholders.

If additional funding is not available, we may be required to terminate, significantly modify or delay the development or commercialization of new products and may not be able to achieve the manufacturing potential of our SCP facility. We may elect to raise additional funds even before we need them if we believe that the conditions for raising capital are favorable.

Cash Flows

Overview

On March 31, 2014, cash and cash equivalents on hand totaled $25.7 million. Short-term investments, generally investment grade commercial paper or corporate debt securities with a remaining term of two years or less, totaled $113.9 million. Working capital totaled $178.2 million and our current ratio (current assets to current liabilities) was approximately 4.6 to 1.0.

Sources and Uses of Cash

Operating activities: Net cash used in operating activities was $4.4 million for the three months ended March 31, 2014, compared with net cash provided by operating activities of $6.9 million during the three months ended March 31, 2013. The decrease in cash provided by operations was primarily due to the $4.6 million decrease in Adjusted EBITDA and the increase in accounts receivable in the three months ended March 31, 2014.

Investing activities: Net cash used in investing activities was $2.1 million for the three months ended March 31, 2014, primarily related to the acquisition of product rights and capital expenditures. Net cash provided by investing activities of $6.7 million during the three months ended March 31, 2013 primarily related to the net change in our short-term investments.

Financing activities: Net cash used in financing activities was $10.2 million for the three months ended March 31, 2014, primarily related to repayment in full of the then outstanding balance of our ABC Loans. Net cash provided by financing activities for the three months ended March 31, 2013 was $0.2 million, primarily related to the proceeds from stock option exercises.

Credit Facilities

Until February 2012, we maintained two active credit facilities; a Senior Secured Revolving Credit Facility and a Term Loan Credit Facility, and in February 2012, we repaid all of our outstanding borrowings and terminated both facilities. We replaced these facilities with a new asset based revolving loan facility with Silicon Valley Bank (“SVB”). At the time we acquired the remaining 50% interest in our SCP subsidiary in June 2013, SCP had two loan facilities with the Agricultural Bank of China (“ABC”) that existed prior to the SCP Acquisition. In September 2013, we entered into a Second Loan Modification agreement with SVB. Refer below for a description of our facilities with SVB and ABC.

Asset Based Revolving Loan Facility

On February 13, 2012, we entered into a Loan and Security Agreement with Silicon Valley Bank (the “SVB Agreement”). The SVB Agreement provides for a $40.0 million asset based revolving loan facility, with availability determined by a borrowing base consisting of eligible accounts receivable and inventory and subject to certain conditions precedent specified in the SVB Agreement. The SVB Agreement matures on February 13, 2016, at which time all outstanding amounts will become due and payable. Borrowings under the SVB Agreement may be used for general corporate purposes, including funding working capital. Amounts drawn bear an interest rate equal to, at our option, either a Eurodollar rate plus 2.50% per annum or an alternative base rate plus 1.50% per annum. We also pay a commitment fee on undrawn amounts equal to 0.30% per annum. During the continuance of an event of default, at Silicon Valley Bank’s option, all obligations will bear interest at a rate per annum equal to 5.00% per annum above the otherwise applicable rate.

Loans under the SVB Agreement are secured by substantially all of our and our principal domestic operating subsidiary’s assets, other than our equity interests in our joint ventures and certain other limited exceptions.

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The SVB Agreement contains various customary affirmative and negative covenants. The negative covenants restrict our ability to, among other things, incur additional indebtedness, create or permit to exist liens, make certain investments, dividends and other payments in respect of capital stock, sell assets or otherwise dispose of our property, change our lines of business, or enter into a merger or acquisition, in each case, subject to thresholds and exceptions as set forth in the SVB Agreement. The financial covenants in the SVB Agreement are limited to maintenance of a minimum adjusted quick ratio and a minimum free cash flow. The SVB Agreement also contains customary events of default, including non-payment of principal, interest and other fees after stated grace periods, violations of covenants, material inaccuracy of representations and warranties, certain bankruptcy and liquidation events, certain material judgments and attachment events, cross-default to other debt in excess of a specified amount and material agreements, failure to maintain certain material governmental approvals, and actual or asserted invalidity of subordination terms, guarantees and collateral, in each case, subject to grace periods, thresholds and exceptions as set forth in the SVB Agreement.

In September 2013, we entered into the Second Loan Modification Agreement (the “Second Modification Agreement”) to the SVB Agreement. The Second Modification Agreement makes certain amendments to the SVB Agreement, including: modifying the calculation methodology of the borrowing base that is used to determine the Company’s borrowing availability, while maximum availability remains $40.0 million; eliminating the covenant to maintain a specified level of free cash flow in quarters where the Company maintains eligible cash balances of $30.0 million or greater and modifying the covenant for the Adjusted Quick Ratio to be tested at the end of each month; and providing additional flexibility for the Company to make certain investments. The Second Modification Agreement did not amend the term of the SVB Agreement, the maximum availability under the SVB Agreement, or the interest rate applicable to amounts drawn under the SVB Agreement, which remain unchanged.

As of March 31, 2014, there were no borrowings outstanding under our Silicon Valley Bank revolving loan facility, and we were in compliance with all covenants under this loan agreement.

Chinese loan facilities

SCP had outstanding debt obligations with ABC at the time of the SCP Acquisition. SCP originally entered into two loan contracts with ABC for RMB 83.0 million ($13.5 million) and RMB 37.0 million ($6.0 million) in August 2010 and June 2011, respectively (the “ABC Loans”). In November 2013, we repaid RMB 55.0 million ($9.0 million) of the then outstanding balance. In January 2014, we repaid in full all outstanding amounts (RMB 63.0 million, $10.3 million) under the ABC Loans, and the loan contracts were terminated.

Aggregate Contractual Obligations

As of March 31, 2014, there were no material changes to the contractual obligations information provided in Item 7 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K, filed with the SEC on March 7, 2014.

Off-Balance Sheet Arrangements

As of March 31, 2014, we were not party to any off-balance sheet arrangements, nor have we created any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. With the exception of operating leases, we do not have any off-balance sheet arrangements or relationships with entities that are not consolidated into or disclosed on our financial statements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources. In addition, we do not engage in trading activities involving non-exchange traded contracts.

Critical Accounting Policies

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. We have identified the following critical accounting policies:

• Revenue recognition;

22

• Inventories;

• Income taxes;

• Stock-based compensation;

• Valuation and impairment of marketable securities;

• Product development; and

• Intangible assets.

For a discussion of critical accounting policies affecting us, see the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” and under Note 1 to our consolidated financial statements for the year ended December 31, 2013 included in our Annual Report on Form 10-K filed with the SEC on March 7, 2014.

There have been no other material changes to the Company’s critical accounting policies and estimates since December 31, 2013.

New Accounting Guidance

There are currently no new accounting pronouncements that will impact the Company.

Contingencies

See Note 18. Commitments and Contingencies, and Part II, Item 1. Legal Proceedings for a discussion of contingencies.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Our market risks relate primarily to changes in interest rates and currency rate fluctuations between the Chinese Renminbi and US dollar.

Our SVB revolving loan facility bears floating interest rates that are tied to LIBOR and an alternate base rate, and therefore, our statements of operations and our cash flows will be exposed to changes in interest rates. As we had no borrowings outstanding at March 31, 2014, there is no impact related to potential changes in the LIBOR rate on our interest expense at March 31, 2014. We historically have not engaged in hedging activities related to our interest rate or foreign exchange risks.

At March 31, 2014, we had cash and cash equivalents and short-term investments of $25.7 million and $113.9 million, respectively. Our cash and cash equivalents are held primarily in cash and money market funds, and our short-term investments are held primarily in corporate debt securities and commercial paper. We do not enter into investments for trading or speculative purposes. Due to the short-term nature of these investments, we believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes in interest rates.

We generally record sales in U.S. dollars and pay our expenses in the local currency of the legal entity that incurs the expense, either U.S. dollars or Chinese Renminbi. Substantially all of our business partners that supply us with API, product development services and finished product manufacturing are located in a number of foreign jurisdictions, and we believe those business partners generally incur their respective operating expenses in local currencies. As a result, both we and our business partners may be exposed to currency rate fluctuations and experience an effective increase in operating expenses in the event local currencies appreciate against the U.S. dollar. In this event, the cost of manufacturing product from our SCP facility may increase or such business partners may elect to stop providing us with these services or attempt to pass these increased costs back to us through increased prices for product development services, API sourcing or finished products that they supply to us. Historically we have not used derivatives to protect against adverse movements in currency rates.

We do not have any foreign currency or any other material derivative financial instruments.

23

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures (a) were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting.

Management, together with our Chief Executive Officer and our Chief Financial Officer, evaluated the changes in our internal control over financial reporting during the quarter ended March 31, 2014. We determined that there were no changes in our internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

24

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we are subject to claims and litigation arising in the ordinary course of business. These claims may include assertions that our products infringe existing patents and claims that the use of our products has caused personal injuries. We intend to vigorously defend any such litigation that may arise under all defenses that would be available to us.

Zoledronic Acid (Generic versions of Zometa^® and Reclast^®). On February 20, 2013, Novartis Pharmaceuticals Corporation (“Novartis”) sued the Company and several other defendants in the United States District Court for the District of New Jersey (Novartis Pharmaceuticals Corporation v. Actavis, LLC, et. al., Case No. 13-cv-1028), alleging, among other things, that sales of the Company’s (i) zoledronic acid premix bag (4mg/100ml), made by ACS Dobfar Info S.A. (“Info”), also a defendant, a generic version of Novartis’ Zometa^® ready to use bottle, would infringe U.S. Patent No. 7,932,241 (the “241 Patent”) and U.S. Patent No. 8,324,189 (the “189 Patent”) and (ii) zoledronic acid premix bag (5mg/100ml), also made by Info, a generic version of Novartis’ Reclast^® ready to use bottle, would infringe U.S. Patent No. 8,052,987 and the 241 Patent, and (iii) zoledronic acid vial (4mg/5ml), made by Actavis LLC, also a defendant, a generic version of Novartis’ Zometa^® vial, would infringe the 189 Patent. On March 1, 2013, the District Court denied Novartis’ request for a temporary restraining order and a preliminary injunction against the Company and the other defendants, including Actavis and Info.

On March 6, 2013, the Company, began selling Actavis’ zoledronic acid vial, the generic version of Zometa^® and as of August 27, 2013 and October 1, 2013, the Company began selling zoledronic acid premix bags in 4mg/100ml and 5mg/100ml presentations, respectively. The Company believes it has substantial meritorious defenses to the case, and the Company has sold and will continue to sell these products. While an estimate of the potential loss resulting from an adverse final determination that one of the patents in suit is valid and infringed cannot currently be made as specific monetary damages have not been asserted, an adverse final determination could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

At this time, there are no other proceedings of which we are aware that are considered likely to have a material adverse effect on the consolidated financial position or results of operations.

Item 1A. Risk Factors.

There were no material changes during the three months ended March 31, 2014 to the risk factors previously disclosed under Item 1A entitled “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC on March 7, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities during the Quarter ended March 31, 2014

There are currently no share repurchase programs authorized by our Board of Directors. We did not repurchase any shares of our common stock during the quarter ended March 31, 2014.

Recent Sales of Unregistered Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

25

Item 5. Other Information

None.

Item 6. Exhibits.

Exhibit Number	Description
3.1	Certificate of Incorporation of Sagent Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 3.3 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).
3.2	Bylaws of Sagent Pharmaceuticals, Inc. (Incorporated by reference to Exhibit 3.4 in the Company’s Registration Statement on Form S-1, as amended (File Nos. 333-170979 and 333-173597)).
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1*	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.1	The following materials from Sagent’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013, (ii) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013, (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text and (vi) document and entity information.

* Filed herewith

26

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SAGENT PHARMACEUTICALS INC.

/s/ Jonathon M. Singer

Jonathon M. Singer

Executive Vice President and Chief Financial Officer

May 6, 2014

27

EX-31.1

EXHIBIT 31.1

Certifications

I, Jeffrey M. Yordon, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sagent Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2014

/s/ Jeffrey M. Yordon

Jeffrey M. Yordon

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certifications

I, Jonathon M. Singer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sagent Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2014

/s/ Jonathon M. Singer

Jonathon M. Singer

Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATIONS OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey M. Yordon, Chief Executive Officer of Sagent Pharmaceuticals, Inc. (“Sagent”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that Sagent’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in Sagent’s Quarterly Report on Form 10-Q fairly presents in all material respects Sagent’s financial condition and results of operations.

/s/ Jeffrey M. Yordon

Jeffrey M. Yordon

Chief Executive Officer

May 6, 2014

I, Jonathon M. Singer, Chief Financial Officer of Sagent Pharmaceuticals, Inc. (“Sagent”), certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that Sagent’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in Sagent’s Quarterly Report on Form 10-Q fairly presents in all material respects Sagent’s financial condition and results of operations.

/s/ Jonathon M. Singer

Jonathon M. Singer

Executive Vice President and Chief Financial Officer

May 6, 2014

A signed original of these written statements required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Sagent Pharmaceuticals, Inc. and will be retained by Sagent Pharmaceuticals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Investments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Cost basis	$ 139,663
Unrealized gains	57
Unrealized losses	(51)
Recorded basis	139,669
Cash and cash equivalents	25,738	42,332	28,118	27,687
Short term investments	113,931	113,810
Cash
Schedule of Available-for-sale Securities [Line Items]
Cost basis	14,156
Recorded basis	14,156
Cash and cash equivalents	14,156
Money market funds
Schedule of Available-for-sale Securities [Line Items]
Cost basis	11,582
Recorded basis	11,582
Cash and cash equivalents	11,582
Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Cost basis	17,097
Unrealized losses	(2)
Recorded basis	17,095
Short term investments	17,095
Corporate bonds and notes
Schedule of Available-for-sale Securities [Line Items]
Cost basis	96,828
Unrealized gains	57
Unrealized losses	(49)
Recorded basis	96,836
Short term investments	$ 96,836

XML

Summary of Fair Value of Preferred Stock Warrants Measured Using Significant Unobservable Inputs (Detail) (Contingent Consideration Liability, USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Contingent Consideration Liability
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at beginning of period	$ 200
Issuance of contingent purchase consideration
Change in fair value of contingent purchase consideration
Payment of contingent purchase consideration
Balance at end of period	$ 200

XML

Schedule of Estimate Amortization Expense over Each of the Next Five Years (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Finite-Lived Intangible Assets [Line Items]
For the year ending March 31, 2015	$ 4,611
For the year ending March 31, 2016	786
For the year ending March 31, 2017	491
For the year ending March 31, 2018	481
For the year ending March 31, 2019	$ 437

XML

Accumulated Other Comprehensive Income (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Currency translation adjustment, net of tax	$ 60	$ 496
Unrealized gains (losses) on available for sale securities, net of tax	6	(9)
Total accumulated other comprehensive income	$ 66	$ 487

XML

Schedule of Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, Gross carrying amount	$ 10,097	$ 9,193
Definite-lived intangible assets, Accumulated amortization	(2,312)	(2,087)
Definite-lived intangible assets, net	7,785	7,106
Intangible assets, Gross carrying amount	11,317	10,413
Intangible assets, Accumulated amortization	(2,312)	(2,087)
Intangible assets, net	9,005	8,326
IPR&D
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived IPR&D, Gross carrying amount	1,220	1,220
Indefinite-lived IPR&D, Accumulated amortization
Indefinite-lived IPR&D, Intangible assets, net	1,220	1,220
Product Licensing Rights
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, Gross carrying amount	5,992	5,941
Definite-lived intangible assets, Accumulated amortization	(2,312)	(2,087)
Definite-lived intangible assets, net	3,680	3,854
Intangible assets, Accumulated amortization	(225)
Product Development Rights
Finite-Lived Intangible Assets [Line Items]
Definite-lived intangible assets, Gross carrying amount	4,105	3,252
Definite-lived intangible assets, net	4,105	3,252
Intangible assets, Accumulated amortization	$ (85)

XML

Accumulated other comprehensive income (Tables)

3 Months Ended

Mar. 31, 2014

Accumulated Other Comprehensive Income

Accumulated other comprehensive income at March 31, 2014 and December 31, 2013 is comprised of the following:

	March 31, 2014		December 31, 2013
Currency translation adjustment, net of tax	$	60	$	496
Unrealized gains (losses) on available for sale securities, net of tax		6		(9	)
Total accumulated other comprehensive income	$	66	$	487

XML

Schedule of Calculation of Numerator and Denominator in Earnings Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Basic and dilutive numerator
Net income, as reported	$ 5,119	$ 9,838
Denominator
Weighted-average common shares outstanding - basic (in thousands)	31,814	28,135
Net effect of dilutive securities Stock options and restricted stock	800	611
Weighted-average common shares outstanding - diluted (in thousands)	32,614	28,746
Net income per common share (basic)	$ 0.16	$ 0.35
Net income per common share (diluted)	$ 0.16	$ 0.34

XML

Acquisitions (Tables)

3 Months Ended

Mar. 31, 2014

Consolidated Pro Forma Operations Results in Acquisitions

The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date.

Condensed consolidated statement of operations information	Three months ended March 31, 2013
Net revenues	$	60,211
Net income		13,628
Diluted income per common share	$	0.47

XML

Condensed Statement of Operations Information (Detail) (Sagent Agila LLC, USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Sagent Agila LLC
Schedule of Equity Method Investments [Line Items]
Net revenues	$ 1,330	$ 5,629
Gross profit	600	1,444
Net income	$ 562	$ 1,083

XML

Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Inventory [Line Items]
Finished goods	$ 41,849	$ 45,947
Raw materials	6,171	5,633
Inventory reserve	(3,841)	(5,099)
Inventory, Net, Total	44,179	46,481
Approved
Inventory [Line Items]
Finished goods	41,849	44,510
Raw materials	3,907	5,614
Inventory reserve	(3,841)	(3,662)
Inventory, Net, Total	41,915	46,462
Pending Regulatory Approval
Inventory [Line Items]
Finished goods		1,437
Raw materials	2,264	19
Inventory reserve		(1,437)
Inventory, Net, Total	$ 2,264	$ 19

XML

Acquisitions - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified			0 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Jun. 04, 2013 SCP	Dec. 12, 2013 Mylan Inc
Business Acquisition [Line Items]
Percentage of remaining equity interest acquired			50.00%
Business acquisition, purchase price			$ 25,000	$ 3,400
Cash			2,704
Inventory			2,396
Prepaid assets			196
Property, plant and equipment			56,654
Long term bank loans			19,095
Accrued compensation and other liabilities			8,954
Goodwill	6,038	6,038	6,038
Business acquisition, gross consideration paid				3,200
Contingent consideration				$ 200

XML

Accrued Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Accrued Liabilities [Line Items]
Payroll and employee benefits	$ 3,440	$ 6,224
Sales and marketing	5,448	5,305
Taxes payable	811	895
Other accrued liabilities	1,646	1,507
Accrued Liabilities, Total	$ 11,345	$ 13,931

XML

Income Taxes - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Income Tax Disclosure [Line Items]
Valuation allowance	$ 17,000
Provision for income taxes	1,214
Correction of state tax expense, included in provision for income taxes	329
Alternative minimum tax carryforwards	$ 885

XML

Movements in Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Intangible Assets Disclosure [Line Items]
Beginning Balance	$ 7,106
Amortization of product rights	(2,312)	(2,087)
Ending Balance	7,785	7,106
IPR&D
Intangible Assets Disclosure [Line Items]
Ending Balance	1,220	1,220
Product Licensing Rights
Intangible Assets Disclosure [Line Items]
Beginning Balance	3,854
Purchase of product rights	51
Amortization of product rights	(225)
Ending Balance	3,680
Product Development Rights
Intangible Assets Disclosure [Line Items]
Beginning Balance	3,252
Purchase of product rights	938
Amortization of product rights	(85)
Ending Balance	$ 4,105

XML

Investments

3 Months Ended

Mar. 31, 2014

Investments

Note 3. Investments:

Our investments at March 31, 2014 were comprised of the following:

	Cost basis		Unrealized gains		Unrealized losses			Recorded basis		Cash and cash equivalents		Short term investments
Assets
Cash	$	14,156	$	—	$	—		$	14,156	$	14,156	$	—
Money market funds		11,582		—		—			11,582		11,582		—
Commercial paper		17,097		—		(2	)		17,095		—		17,095
Corporate bonds and notes		96,828		57		(49	)		96,836		—		96,836
	$	139,663	$	57	$	(51	)	$	139,669	$	25,738	$	113,931

Investments with continuous unrealized losses for less than twelve months and their related fair values at March 31, 2014 were as follows:

	Fair value		Unrealized losses
Commercial paper	$	9,395	$	(2	)
Corporate bonds and notes		39,824		(49	)
	$	49,219	$	(51	)

Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Because we do not currently intend to sell these investments, and it is not more likely than not that we will be required to sell our investments before recovery of their amortized cost basis, which may be maturity, we do not consider these investments to be other-than-temporarily impaired at March 31, 2014.

The original cost and estimated current fair value of our fixed-income securities at March 31, 2014 are set forth below.

	Cost basis		Estimated fair value
Due in one year or less	$	62,948	$	62,966
Due between one and five years		50,977		50,965
	$	113,925	$	113,931

XML

Actavis Contract Termination - Additional Information (Detail) (Actavis, USD $) In Thousands, unless otherwise specified	1 Months Ended
	Mar. 31, 2013
Actavis
Restructuring Cost and Reserve [Line Items]
Development, manufacturing and supply agreement, effective termination date	Dec. 31, 2014
Development, manufacturing and supply agreement, one time payment for termination	$ 5,000

XML

Property Plant and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property Plant and equipment before depreciation	$ 60,431	$ 60,391
Less accumulated depreciation	(3,738)	(2,707)
Property Plant and equipment after depreciation	56,693	57,684
Land and Land Improvements
Property, Plant and Equipment [Line Items]
Property Plant and equipment before depreciation	2,215	2,235
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property Plant and equipment before depreciation	19,520	19,696
Machinery, equipment, furniture, and fixtures
Property, Plant and Equipment [Line Items]
Property Plant and equipment before depreciation	38,077	38,000
Construction in process
Property, Plant and Equipment [Line Items]
Property Plant and equipment before depreciation	$ 619	$ 460

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Goodwill and Intangible assets, net (Tables)

3 Months Ended

Mar. 31, 2014

Schedule of Intangible Assets - Indefinite Lived

Intangible assets at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014							December 31, 2013
	Gross carrying amount		Accumulated amortization			Intangible assets, net		Gross carrying amount		Accumulated amortization			Intangible assets, net
Product licensing rights	$	5,992	$	(2,312	)	$	3,680	$	5,941	$	(2,087	)	$	3,854
Product development rights		4,105		—			4,105		3,252		—			3,252
Total definite-lived intangible assets	$	10,097	$	(2,312	)	$	7,785	$	9,193	$	(2,087	)	$	7,106
In-process research and development (IPR&D)	$	1,220	$	—		$	1,220	$	1,220	$	—		$	1,220
Total intangible assets	$	11,317	$	(2,312	)	$	9,005	$	10,413	$	(2,087	)	$	8,326

Schedule of Intangible Assets -Finite lived

Intangible assets at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014							December 31, 2013
	Gross carrying amount		Accumulated amortization			Intangible assets, net		Gross carrying amount		Accumulated amortization			Intangible assets, net
Product licensing rights	$	5,992	$	(2,312	)	$	3,680	$	5,941	$	(2,087	)	$	3,854
Product development rights		4,105		—			4,105		3,252		—			3,252
Total definite-lived intangible assets	$	10,097	$	(2,312	)	$	7,785	$	9,193	$	(2,087	)	$	7,106
In-process research and development (IPR&D)	$	1,220	$	—		$	1,220	$	1,220	$	—		$	1,220
Total intangible assets	$	11,317	$	(2,312	)	$	9,005	$	10,413	$	(2,087	)	$	8,326

Movements in Intangible Assets

Movements in intangible assets were due to the following:

	Product licensing rights			Product development rights			IPR&D
December 31, 2013	$	3,854		$	3,252		$	1,220
Purchase of product rights		51			938			—
Amortization of product rights		(225	)		(85	)		—
March 31, 2014	$	3,680		$	4,105		$	1,220

Schedule of Estimate Amortization Expense over Each of the Next Five Years

We currently estimate amortization expense over each of the next five years as follows:

For the year ending:	Amortization expense
March 31, 2015	$	4,611
March 31, 2016		786
March 31, 2017		491
March 31, 2018		481
March 31, 2019		437

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Property, plant and equipment (Tables)

3 Months Ended

Mar. 31, 2014

Property, Plant and Equipment

Property, plant and equipment at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014			December 31, 2013
Land and land improvements	$	2,215		$	2,235
Buildings and improvements		19,520			19,696
Machinery, equipment, furniture and fixtures		38,077			38,000
Construction in process		619			460
		60,431			60,391
Less accumulated depreciation		(3,738	)		(2,707	)
	$	56,693		$	57,684

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Earnings Per Share - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive share excluded from the calculation of diluted earnings	1,196,646	735,843

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Property Plant and Equipment - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 1,041	$ 64

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Investment (Tables) (Sagent Agila LLC)

3 Months Ended

Mar. 31, 2014

Sagent Agila LLC

Changes in Investment

Changes in our investment in Sagent Agila during the three months ended March 31, 2014 were as follows:

Investment in Sagent Agila at January 1, 2014	$	2,063
Equity in net income of Sagent Agila		281
Investment in Sagent Agila at March 31, 2014	$	2,344

Condensed Statement of Operations Information

Condensed statement of operations information of Sagent Agila is presented below.

	Three months ended March 31,
Condensed statement of operations information	2014		2013
Net revenues	$	1,330	$	5,629
Gross profit		600		1,444
Net income		562		1,083

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Accrued liabilities (Tables)

3 Months Ended

Mar. 31, 2014

Accrued Liabilities

Accrued liabilities at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014		December 31, 2013
Payroll and employee benefits	$	3,440	$	6,224
Sales and marketing		5,448		5,305
Taxes payable		811		895
Other accrued liabilities		1,646		1,507
	$	11,345	$	13,931

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Acquisitions

3 Months Ended

Mar. 31, 2014

Acquisitions

Note 2. Acquisitions:

Remaining equity interest of SCP

On June 4, 2013, we acquired Chengdu Kanghong Pharmaceuticals (Group) Co. Ltd (“CKT”) 50% equity interest in KSCP for $25,000, payable in installments through September 2015. We acquired net tangible assets consisting primarily of cash of $2,704, inventory of $2,396, prepaid assets of $196, and property, plant and equipment of $56,654, net of assumed liabilities, primarily long term bank loans of $19,095 and accrued compensation and other liabilities of $8,954. We recorded goodwill of $6,038 due to the synergies achieved by having control over the products and manufacturing at the SCP facility.

Product rights acquisitions

On December 12, 2013, we acquired two products, Mesna and Acetylcysteine, owned by Sagent Agila in an agreement with Mylan Inc. The total fair value of consideration transferred was $3,400, consisting of $3,200 of cash and $200 of contingent consideration.

The following unaudited pro forma financial information reflects the consolidated results of operations of Sagent as if these acquisitions had taken place on January 1, 2013. The pro forma information includes acquisition and integration expenses. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date.

Condensed consolidated statement of operations information	Three months ended March 31, 2013
Net revenues	$	60,211
Net income		13,628
Diluted income per common share	$	0.47

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Fair value measurements (Tables)

3 Months Ended

Mar. 31, 2014

Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets measured at fair value on a recurring basis as of March 31, 2014 consisted of the following:

	Total fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	11,582	$	11,582	$	—	$	—
Corporate bonds and notes		96,836		—		96,836		—
Commercial paper		17,095		—		17,095		—
Short-term investments	$	113,931	$	—	$	113,931	$	—
Total assets	$	125,513	$	11,582	$	113,931	$	—
Liabilities
Contingent purchase consideration	$	200	$	—	$	—	$	200

Assets measured at fair value on a recurring basis as of December 31, 2013 consisted of the following:

	Total fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	11,592	$	11,592	$	—	$	—
Corporate bonds and notes		92,516		—		92,516		—
Commercial paper		21,294		—		21,294		—
Short-term investments	$	113,810	$	—	$	113,810	$	—
Total assets	$	125,402	$	11,592	$	113,810	$	—
Liabilities
Contingent purchase consideration	$	200	$	—	$	—	$	200

Summary of Fair Value of Preferred Stock Warrants Measured Using Significant Unobservable Inputs

Changes in the fair value of our contingent purchase consideration measured using significant unobservable inputs (Level 3), during the three months ending March 31, 2014 were as follows:

Balance at January 1, 2014	$	200
Issuance of contingent purchase consideration		—
Change in fair value of contingent purchase consideration		—
Payment of contingent purchase consideration		—
Balance at March 31, 2014	$	200

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Investments with Continuous Unrealized Losses for Less Than Twelve Months and Related Fair Values (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Fair value	$ 49,219
Unrealized losses	(51)
Commercial paper
Schedule of Available-for-sale Securities [Line Items]
Fair value	9,395
Unrealized losses	(2)
Corporate bonds and notes
Schedule of Available-for-sale Securities [Line Items]
Fair value	39,824
Unrealized losses	$ (49)

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Summary of Assets Measured at Fair Value on Recurring Basis (Detail) (Assets measured at fair value on a recurring basis, USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 125,513	$ 125,402
Contingent purchase consideration	200	200
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,582	11,592
Corporate bonds and notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	96,836	92,516
Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	17,095	21,294
Short-term investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	113,931	113,810
Quoted prices in active markets for identical assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,582	11,592
Quoted prices in active markets for identical assets (Level 1) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,582	11,592
Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	113,931	113,810
Significant other observable inputs (Level 2) | Corporate bonds and notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	96,836	92,516
Significant other observable inputs (Level 2) | Commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	17,095	21,294
Significant other observable inputs (Level 2) | Short-term investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	113,931	113,810
Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent purchase consideration	$ 200	$ 200

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 25,738	$ 42,332
Short-term investments	113,931	113,810
Accounts receivable, net of chargebacks and other deductions	33,204	23,033
Inventories, net	44,179	46,481
Due from related party	3,385	3,644
Prepaid expenses and other current assets	6,615	6,491
Total current assets	227,052	235,791
Property, plant, and equipment, net	56,693	57,684
Investment in joint ventures	2,344	2,063
Goodwill	6,038	6,038
Intangible assets, net	9,005	8,326
Other assets	282	306
Total assets	301,414	310,208
Current liabilities:
Accounts payable	21,835	24,010
Due to related party	3,790	3,129
Accrued profit sharing	8,448	8,740
Accrued liabilities	11,345	13,931
Current portion of deferred purchase consideration	3,420	3,381
Current portion of long-term debt		10,333
Total current liabilities	48,838	63,524
Long term liabilities:
Long-term portion of deferred purchase consideration	8,425	8,329
Other long-term liabilities	2,080	2,329
Total liabilities	59,343	74,182
Stockholders' equity:
Common stock-$0.01 par value, 100,000,000 authorized, and 31,863,440 and 31,789,348 outstanding at March 31, 2014 and December 31, 2013, respectively	319	318
Additional paid-in capital	350,624	349,278
Accumulated other comprehensive income	66	487
Accumulated deficit	(108,938)	(114,057)
Total stockholders' equity	242,071	236,026
Total liabilities and stockholders' equity	$ 301,414	$ 310,208

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Goodwill and Intangible assets, net - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2014 Right	Mar. 31, 2013	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Goodwill acquired	$ 6,038		$ 6,038
Goodwill impairment	$ 0	$ 0
Number of products	21
Product Licensing Rights
Finite-Lived Intangible Assets [Line Items]
Weighted-average period prior to next extension or renewal of intangible asset	70 months

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities
Net income	$ 5,119	$ 9,838
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	1,750	1,274
Stock-based compensation	1,196	2,077
Equity in net (income) loss of joint ventures	(281)	443
Dividends from unconsolidated joint ventures		926
Changes in operating assets and liabilities:
Accounts receivable, net	(10,172)	(4,233)
Inventories, net	2,272	(2,667)
Prepaid expenses and other current assets	(129)	(247)
Due from related party	259	(3,292)
Accounts payable and other accrued liabilities	(4,409)	2,780
Net cash (used in) provided by operating activities	(4,395)	6,899
Cash flows from investing activities
Capital expenditures	(556)	(92)
Investments in unconsolidated joint ventures		(11)
Purchases of investments	(21,784)	(99,648)
Sale of investments	21,250	93,200
Purchase of product rights	(989)	(100)
Net cash used in investing activities	(2,079)	(6,651)
Cash flows from financing activities
Repayment of long-term debt	(10,324)
Proceeds from issuance of common stock, net of issuance costs	149	183
Net cash (used in) provided by financing activities	(10,175)	183
Effect of exchange rate movements in cash	55
Net (decrease) increase in cash and cash equivalents	(16,594)	431
Cash and cash equivalents, at beginning of period	42,332	27,687
Cash and cash equivalents, at end of period	$ 25,738	$ 28,118

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Schedule of Net Amount of Risk by Product and Guarantee (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Product Information [Line Items]
Net revenue by Product Line	$ 70,869	$ 60,211
Anti-infective
Product Information [Line Items]
Net revenue by Product Line	27,148	22,179
Critical care
Product Information [Line Items]
Net revenue by Product Line	21,585	19,088
Oncology
Product Information [Line Items]
Net revenue by Product Line	$ 22,136	$ 18,944

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Net Revenue by Product (Tables)

3 Months Ended

Mar. 31, 2014

Schedule of Net Revenue by Therapeutic Class

Net revenue by therapeutic class is as follows:

	Three months ended March 31,
Therapeutic class:	2014		2013
Anti-infective	$	27,148	$	22,179
Critical care		21,585		19,088
Oncology		22,136		18,944
	$	70,869	$	60,211

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes

Note 16. Income Taxes:

Valuation Allowance

We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets. We establish valuation allowances if it is not likely we will realize our deferred income tax assets. In making this determination, we consider all available positive and negative evidence and make certain assumptions. We consider, among other things, our deferred tax liabilities, the overall business environment, our historical financial results, our industry’s historically cyclical financial results and potential current and future tax planning strategies.

We recorded a full valuation allowance in 2007 due to our cumulative loss position at that time. At March 31, 2014, we had approximately a $17,000 valuation allowance established against our domestic deferred income tax assets, which represents a full valuation allowance against our net domestic deferred income tax assets.

During the first quarter of 2014, we moved from a cumulative loss position over the previous three years to a cumulative income position for the first time since we established the full valuation allowance. While this is positive information, we have concluded as of March 31, 2014 that the valuation allowance was still needed on our net deferred tax assets based upon the weight of the factors described above, especially considering our history that included six consecutive years of losses. We continue to evaluate our cumulative income position and income trend as well as our future projections of sustained profitability. We evaluate whether this profitability trend constitutes sufficient positive evidence to support a reversal of our valuation allowance (in full or in part). If this profitability trend continues for the remainder of 2014 and this level of profitability is projected in the future, we anticipate that we may reverse substantially all of our domestic valuation allowance as early as the end of 2014.

2014 tax provision

Our provision for income taxes for the three months ended March 31, 2014 was $1,214. Of our total provision for income taxes, $885 represents the alternative minimum tax (“AMT”) payable in the United States for 2014 and income taxes payable in certain states where we do not have available loss carryforwards. As we have recorded a full valuation allowance against our deferred tax assets, our AMT payable is recorded as tax expense. The remaining provision for income taxes, $329, relates to the correction of state tax expense that was not recorded during the year ended December 31, 2013.

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Basis of presentation - Additional Information (Detail) (KSCP)	Jun. 30, 2013
KSCP
Basis of Presentation [Line Items]
Percentage of remaining equity interest acquired	50.00%

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Commitments and contingencies

3 Months Ended

Mar. 31, 2014

Commitments and contingencies

Note 18. Commitments and contingencies:

Litigation

From time to time, we are subject to claims and litigation arising in the ordinary course of business. These claims may include assertions that our products infringe existing patents and claims that the use of our products has caused personal injuries. We intend to vigorously defend any such litigation that may arise under all defenses that would be available to us.

Zoledronic Acid (Generic versions of Zometa^® and Reclast^®). On February 20, 2013, Novartis Pharmaceuticals Corporation (“Novartis”) sued the Company and several other defendants in the United States District Court for the District of New Jersey (Novartis Pharmaceuticals Corporation v. Actavis, LLC, et. al., Case No. 13-cv-1028), alleging, among other things, that sales of the Company’s (i) zoledronic acid premix bag (4mg/100ml), made by ACS Dobfar Info S.A. (“Info”), also a defendant, a generic version of Novartis’ Zometa^® ready to use bottle, would infringe U.S. Patent No. 7,932,241 (the “241 Patent”) and U.S. Patent No. 8,324,189 (the “189 Patent”) and (ii) zoledronic acid premix bag (5mg/100ml), also made by Info, a generic version of Novartis’ Reclast^® ready to use bottle, would infringe U.S. Patent No. 8,052,987 and the 241 Patent, and (iii) zoledronic acid vial (4mg/5ml), made by Actavis LLC, also a defendant, a generic version of Novartis’ Zometa^® vial, would infringe the 189 Patent. On March 1, 2013, the District Court denied Novartis’ request for a temporary restraining order and a preliminary injunction against the Company and the other defendants, including Actavis and Info.

On March 6, 2013, the Company, began selling Actavis’ zoledronic acid vial, the generic version of Zometa^® and as of August 27, 2013 and October 1, 2013, the Company began selling zoledronic acid premix bags in 4mg/100ml and5mg/100ml presentations, respectively. The Company believes it has substantial meritorious defenses to the case, and the Company has sold and will continue to sell these products. While an estimate of the potential loss resulting from an adverse final determination that one of the patents in suit is valid and infringed cannot currently be made as specific monetary damages have not been asserted, an adverse final determination could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

At this time, there are no other proceedings of which we are aware that are considered likely to have a material adverse effect on the consolidated financial position or results of operations.

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Basis of presentation

3 Months Ended

Mar. 31, 2014

Basis of presentation

Note 1. Basis of presentation:

Our interim condensed consolidated financial statements are unaudited. We prepared the condensed consolidated financial statements following rules for interim reporting as prescribed by the U.S. Securities and Exchange Commission (“SEC”). As permitted under those rules, we have condensed or omitted a number of footnotes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). It is management’s opinion that these financial statements include all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of our financial position, operating results and cash flows. Operating results for any interim period are not necessarily indicative of future or annual results.

The condensed consolidated financial statements include Sagent as well as our wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. We account for our investment in Sagent Agila LLC (formerly Sagent Strides LLC) using the equity method of accounting, as our interest in the entity provides for joint financial and operational control.

In June 2013, we acquired the remaining 50% interest in Kanghong Sagent (Chengdu) Pharmaceutical Co., Ltd. (“KSCP”), which we subsequently renamed Sagent (China) Pharmaceuticals Co., Ltd. (“SCP”), from our former joint venture partner. Accordingly, commencing as of June 30, 2013, our condensed consolidated financial statements include SCP as a wholly-owned subsidiary. Prior to the acquisition, we accounted for our investment in KSCP using the equity method of accounting, as our interest in the entity provided for joint financial and operational control.

Certain amounts previously included in accounts payable have been reclassified to accrued liabilities to conform to the current period presentation.

You should read these statements in conjunction with our consolidated financial statements and related notes for the year ended December 31, 2013, included in our most recent Annual Report on Form 10-K filed with the SEC on March 7, 2014.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized shares	100,000,000	100,000,000
Common stock, outstanding shares	31,863,440	31,789,348

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Accumulated other comprehensive income

3 Months Ended

Mar. 31, 2014

Accumulated other comprehensive income

Note 11. Accumulated other comprehensive income:

Accumulated other comprehensive income at March 31, 2014 and December 31, 2013 is comprised of the following:

	March 31, 2014		December 31, 2013
Currency translation adjustment, net of tax	$	60	$	496
Unrealized gains (losses) on available for sale securities, net of tax		6		(9	)
Total accumulated other comprehensive income	$	66	$	487

There were no amounts reclassified from accumulated other comprehensive income during the three months ended March 31, 2014.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 30, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1
Trading Symbol	SGNT
Entity Registrant Name	SAGENT PHARMACEUTICALS, INC.
Entity Central Index Key	0001369786
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		31,865,070

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Earnings per share

3 Months Ended

Mar. 31, 2014

Earnings per share

Note 12. Earnings per share:

Basic earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Because of their anti-dilutive effect, 1,196,646 and 735,843 common share equivalents, comprised of restricted stock and unexercised stock options, have been excluded from the calculation of diluted earnings per share for the periods ended March 31, 2014 and 2013, respectively.

The table below presents the computation of basic and diluted earnings per share for the three months ended March 31, 2014 and 2013:

	Three months ended March 31,
	2014		2013
Basic and dilutive numerator:
Net income, as reported	$	5,119	$	9,838
Denominator:
Weighted-average common shares outstanding - basic (in thousands)		31,814		28,135
Net effect of dilutive securities:
Stock options and restricted stock		800		611
Weighted-average common shares outstanding - diluted (in thousands)		32,614		28,746
Net income per common share (basic)	$	0.16	$	0.35
Net income per common share (diluted)	$	0.16	$	0.34

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net revenue	$ 70,869	$ 60,211
Cost of sales	50,485	41,753
Gross profit	20,384	18,458
Operating expenses:
Product development	4,020	4,261
Selling, general and administrative	10,013	8,867
Equity in net (income) loss of joint ventures	(281)	443
Total operating expenses	13,752	13,571
Termination fee		5,000
Income from operations	6,632	9,887
Interest income and other	(86)	16
Interest expense	(213)	(65)
Income before income taxes	6,333	9,838
Provision for income taxes	1,214
Net income	$ 5,119	$ 9,838
Net income per common share:
Basic	$ 0.16	$ 0.35
Diluted	$ 0.16	$ 0.34
Weighted-average of shares used to compute net income per common share:
Basic	31,814	28,135
Diluted	32,614	28,746

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Goodwill and Intangible assets, net

3 Months Ended

Mar. 31, 2014

Goodwill and Intangible assets, net

Note 6. Goodwill and Intangible assets, net:

Goodwill at March 31, 2014 and December 31, 2013 was $6,038 and there were no goodwill impairment losses for the three months ended March 31, 2014 and 2013, respectively.

Intangible assets at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014							December 31, 2013
	Gross carrying amount		Accumulated amortization			Intangible assets, net		Gross carrying amount		Accumulated amortization			Intangible assets, net
Product licensing rights	$	5,992	$	(2,312	)	$	3,680	$	5,941	$	(2,087	)	$	3,854
Product development rights		4,105		—			4,105		3,252		—			3,252
Total definite-lived intangible assets	$	10,097	$	(2,312	)	$	7,785	$	9,193	$	(2,087	)	$	7,106
In-process research and development (IPR&D)	$	1,220	$	—		$	1,220	$	1,220	$	—		$	1,220
Total intangible assets	$	11,317	$	(2,312	)	$	9,005	$	10,413	$	(2,087	)	$	8,326

Movements in intangible assets were due to the following:

	Product licensing rights			Product development rights			IPR&D
December 31, 2013	$	3,854		$	3,252		$	1,220
Purchase of product rights		51			938			—
Amortization of product rights		(225	)		(85	)		—
March 31, 2014	$	3,680		$	4,105		$	1,220

The weighted-average period prior to the next extension or renewal for the 21 products comprising our product licensing rights intangible asset was 70 months at March 31, 2014.

We currently estimate amortization expense over each of the next five years as follows:

For the year ending:	Amortization expense
March 31, 2015	$	4,611
March 31, 2016		786
March 31, 2017		491
March 31, 2018		481
March 31, 2019		437

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Property, plant and equipment

3 Months Ended

Mar. 31, 2014

Property, plant and equipment

Note 5. Property, plant and equipment

Property, plant and equipment at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014			December 31, 2013
Land and land improvements	$	2,215		$	2,235
Buildings and improvements		19,520			19,696
Machinery, equipment, furniture and fixtures		38,077			38,000
Construction in process		619			460
		60,431			60,391
Less accumulated depreciation		(3,738	)		(2,707	)
	$	56,693		$	57,684

Depreciation expense was $1,041 and $64 for the three months ending March 31, 2014 and 2013, respectively.

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Actavis contract termination

3 Months Ended

Mar. 31, 2014

Actavis contract termination

Note 17. Actavis contract termination:

In March 2013, we agreed with Actavis, LLC (“Actavis”), a contract manufacturer of the Company, to terminate our development, manufacturing and supply agreement, effective December 31, 2014. As consideration for the termination of the agreement, we received a greater percentage of the net profit from sales of products during the remaining term of the agreement and a one-time, non-refundable payment of $5,000, which is not subject to future performance. This payment is included in Termination fee in our Condensed Consolidated Statement of Operations for the three months ended March 31, 2013.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

Stock-Based Compensation

Note 13. Stock-based compensation:

We granted 251,058 stock options, 18,600 restricted stock units and 47,714 restricted stock awards during the three months ended March 31, 2014. We granted 370,024 stock options, 12,156 restricted stock units and 41,702 restricted stock awards during the three months ended March 31, 2013. There were 54,570 and 25,043 stock options exercised during the three months ended March 31, 2014 and 2013, respectively, with an aggregate intrinsic value of $957 and $236, respectively.

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Accrued liabilities

3 Months Ended

Mar. 31, 2014

Accrued liabilities

Note 9. Accrued liabilities:

Accrued liabilities at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014		December 31, 2013
Payroll and employee benefits	$	3,440	$	6,224
Sales and marketing		5,448		5,305
Taxes payable		811		895
Other accrued liabilities		1,646		1,507
	$	11,345	$	13,931

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Related Party Transactions - Additional Information (Detail) (Sagent Agila LLC, USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Sagent Agila LLC
Related Party Transaction [Line Items]
Receivables from related party	$ 3,385	$ 3,644
Payable for the acquisition of inventory	$ 3,790	$ 3,129

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Investment (Sagent Agila LLC)

3 Months Ended

Mar. 31, 2014

Sagent Agila LLC

Investment

Note 7. Investment in Sagent Agila:

Changes in our investment in Sagent Agila during the three months ended March 31, 2014 were as follows:

Investment in Sagent Agila at January 1, 2014	$	2,063
Equity in net income of Sagent Agila		281
Investment in Sagent Agila at March 31, 2014	$	2,344

Condensed statement of operations information of Sagent Agila is presented below.

	Three months ended March 31,
Condensed statement of operations information	2014		2013
Net revenues	$	1,330	$	5,629
Gross profit		600		1,444
Net income		562		1,083

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Debt

3 Months Ended

Mar. 31, 2014

Debt

Note 8. Debt:

SCP credit facilities

In connection with the acquisition of the remaining 50% equity interest in SCP in June 2013, we assumed two loan contracts with the Agricultural Bank of China Ltd. in the amount of RMB 37,000 ($6,014) and RMB 83,000 ($13,491) originally entered into in June 2011 and August 2010, respectively, (the “ABC Loans”) each with a five year term. Amounts outstanding under the ABC Loans bore an interest rate equal to the benchmark lending interest rate published by the People’s Bank of China, subject to adjustment every three months. As the interest rate resets on a quarterly basis, the fair value of our long-term debt approximated its carrying value. On January 2, 2014, we repaid in full the then-outstanding balance of the ABC Loans, totaling RMB 63,000 ($10,333). Upon prepayment of the ABC Loans, the loan contracts were terminated. No early termination fees were incurred as part of the prepayment of the ABC Loans.

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Fair value measurements

3 Months Ended

Mar. 31, 2014

Fair value measurements

Note 10. Fair value measurements:

Assets measured at fair value on a recurring basis as of March 31, 2014 consisted of the following:

	Total fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	11,582	$	11,582	$	—	$	—
Corporate bonds and notes		96,836		—		96,836		—
Commercial paper		17,095		—		17,095		—
Short-term investments	$	113,931	$	—	$	113,931	$	—
Total assets	$	125,513	$	11,582	$	113,931	$	—
Liabilities
Contingent purchase consideration	$	200	$	—	$	—	$	200

The fair value of our Level 2 investments is based on a combination of quoted market prices of similar securities and matrix pricing provided by third-party pricing services utilizing securities of similar quality and maturity. The fair value of our Level 3 contingent consideration is based upon a probability weighting approach that considered the possible outcomes based on assumptions related to the timing and probability of the product approval date.

Assets measured at fair value on a recurring basis as of December 31, 2013 consisted of the following:

	Total fair value		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	11,592	$	11,592	$	—	$	—
Corporate bonds and notes		92,516		—		92,516		—
Commercial paper		21,294		—		21,294		—
Short-term investments	$	113,810	$	—	$	113,810	$	—
Total assets	$	125,402	$	11,592	$	113,810	$	—
Liabilities
Contingent purchase consideration	$	200	$	—	$	—	$	200

There were no transfers of assets between Level 1, Level 2 or Level 3 during the periods presented.

Changes in the fair value of our contingent purchase consideration measured using significant unobservable inputs (Level 3), during the three months ending March 31, 2014 were as follows:

Balance at January 1, 2014	$	200
Issuance of contingent purchase consideration		—
Change in fair value of contingent purchase consideration		—
Payment of contingent purchase consideration		—
Balance at March 31, 2014	$	200

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Earnings per share (Tables)

3 Months Ended

Mar. 31, 2014

Schedule of Calculation of Numerator and Denominator in Earnings Per Share

The table below presents the computation of basic and diluted earnings per share for the three months ended March 31, 2014 and 2013:

	Three months ended March 31,
	2014		2013
Basic and dilutive numerator:
Net income, as reported	$	5,119	$	9,838
Denominator:
Weighted-average common shares outstanding - basic (in thousands)		31,814		28,135
Net effect of dilutive securities:
Stock options and restricted stock		800		611
Weighted-average common shares outstanding - diluted (in thousands)		32,614		28,746
Net income per common share (basic)	$	0.16	$	0.35
Net income per common share (diluted)	$	0.16	$	0.34

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Debt - Additional Information (Detail) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Jan. 02, 2014 USD ($)	Jan. 02, 2014 CNY	Jun. 04, 2013 Loan Contract One USD ($)	Jun. 04, 2013 Loan Contract One CNY	Jun. 04, 2013 Loan Contract Two USD ($)	Jun. 04, 2013 Loan Contract Two CNY
Line of Credit Facility [Line Items]
Loan contracts assumed in a business combination				$ 6,014	37,000	$ 13,491	83,000
Period of loan contract	5 years
Outstanding ABC loan amount		$ 10,333	63,000

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Related party transactions

3 Months Ended

Mar. 31, 2014

Related party transactions

Note 15. Related party transactions:

As of March 31, 2014 and December 31, 2013, respectively, we had a receivable of $3,385 and $3,644 from Sagent Agila LLC, which is expected to offset future profit-sharing payments. As of March 31, 2014 and December 31, 2013, respectively, we had a payable of $3,790 and $3,129 to Sagent Agila LLC, principally for the acquisition of inventory and amounts due under profit-sharing arrangements.

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Investments (Tables)

3 Months Ended

Mar. 31, 2014

Investments

Our investments at March 31, 2014 were comprised of the following:

	Cost basis		Unrealized gains		Unrealized losses			Recorded basis		Cash and cash equivalents		Short term investments
Assets
Cash	$	14,156	$	—	$	—		$	14,156	$	14,156	$	—
Money market funds		11,582		—		—			11,582		11,582		—
Commercial paper		17,097		—		(2	)		17,095		—		17,095
Corporate bonds and notes		96,828		57		(49	)		96,836		—		96,836
	$	139,663	$	57	$	(51	)	$	139,669	$	25,738	$	113,931

Investments with Continuous Unrealized Losses for Less Than Twelve Months and Related Fair Values

Investments with continuous unrealized losses for less than twelve months and their related fair values at March 31, 2014 were as follows:

	Fair value		Unrealized losses
Commercial paper	$	9,395	$	(2	)
Corporate bonds and notes		39,824		(49	)
	$	49,219	$	(51	)

Cost and Estimated Current Fair Value of Fixed-Income Securities

The original cost and estimated current fair value of our fixed-income securities at March 31, 2014 are set forth below.

	Cost basis		Estimated fair value
Due in one year or less	$	62,948	$	62,966
Due between one and five years		50,977		50,965
	$	113,925	$	113,931

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Changes in Investment of Sagent Agila (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule of Equity Method Investments [Line Items]
Investment at beginning of the period	$ 2,063
Equity in net loss (income) of joint ventures	(281)	443
Investment at end of the period	2,344
Sagent Agila LLC
Schedule of Equity Method Investments [Line Items]
Investment at beginning of the period	2,063
Equity in net loss (income) of joint ventures	281
Investment at end of the period	$ 2,344

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Cost and Estimated Current Fair Value of Fixed-Income Securities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less, cost basis	$ 62,948
Due between one and five years, cost basis	50,977
Total fixed income securities, cost basis	113,925
Due in one year or less, Estimated fair value	62,966
Due between one and five years, Estimated fair value	50,965
Total fixed income securities, Estimated fair value	$ 113,931

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net income	$ 5,119	$ 9,838
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(436)	31
Unrealized gains (losses) on available for sale securities	15	(59)
Total other comprehensive income (loss), net of tax	(421)	(28)
Comprehensive income	$ 4,698	$ 9,810

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Inventories

3 Months Ended

Mar. 31, 2014

Inventories

Note 4. Inventories:

Inventories at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014								December 31, 2013
	Approved			Pending regulatory approval		Inventory			Approved			Pending regulatory approval			Inventory
Finished goods	$	41,849		$	—	$	41,849		$	44,510		$	1,437		$	45,947
Raw materials		3,907			2,264		6,171			5,614			19			5,633
Inventory reserve		(3,841	)		—		(3,841	)		(3,662	)		(1,437	)		(5,099	)
	$	41,915		$	2,264	$	44,179		$	46,462		$	19		$	46,481

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Stock- Based Compensation - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted	251,058	370,024
Stock options exercised	54,570	25,043
Stock options aggregate intrinsic value	$ 957	$ 236
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	18,600	12,156
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	47,714	41,702

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Inventories (Tables)

3 Months Ended

Mar. 31, 2014

Inventory Valuation

Inventories at March 31, 2014 and December 31, 2013 were as follows:

	March 31, 2014								December 31, 2013
	Approved			Pending regulatory approval		Inventory			Approved			Pending regulatory approval			Inventory
Finished goods	$	41,849		$	—	$	41,849		$	44,510		$	1,437		$	45,947
Raw materials		3,907			2,264		6,171			5,614			19			5,633
Inventory reserve		(3,841	)		—		(3,841	)		(3,662	)		(1,437	)		(5,099	)
	$	41,915		$	2,264	$	44,179		$	46,462		$	19		$	46,481

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Consolidated Pro Forma Operations Results in Acquisitions (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Business Acquisition [Line Items]
Net revenues	$ 60,211
Net income	$ 13,628
Diluted income per common share	$ 0.47

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Net Revenue by Product

3 Months Ended

Mar. 31, 2014

Net Revenue by Product

Note 14. Net revenue by product:

Net revenue by therapeutic class is as follows:

	Three months ended March 31,
Therapeutic class:	2014		2013
Anti-infective	$	27,148	$	22,179
Critical care		21,585		19,088
Oncology		22,136		18,944
	$	70,869	$	60,211