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, 2013

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	(I.R.S. Employer
incorporation or organization)	Identification No.)
1901 N. Roselle Road, Suite 700 Schaumburg, Illinois	60195
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone numsber, 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, 2013, there were 28,141,532 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, 2013 and December 31, 2012		1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2013 and 2012		2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2013 and 2012		3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012		4
	Notes to Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		18
Item 4.	Controls and Procedures		18
PART II –	OTHER INFORMATION
Item 1.	Legal Proceedings		20
Item 1A.	Risk Factors		20
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		20
Item 3.	Defaults Upon Senior Securities		20
Item 4.	Mine Safety Disclosures		20
Item 5.	Other Information		20
Item 6.	Exhibits		21
	Signature		22

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.

Sagent Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

	March 31,			December 31,
	2013			2012
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	28,118		$	27,687
Short-term investments		42,861			36,605
Accounts receivable, net of chargebacks and other deductions		35,842			31,609
Inventories, net		49,773			47,106
Due from related party		4,695			1,440
Prepaid expenses and other current assets		3,105			2,821
Total current assets		164,394			147,268
Property, plant, and equipment, net		808			780
Investment in joint ventures		18,295			19,622
Intangible assets, net		2,971			4,277
Other assets		347			368
Total assets	$	186,815		$	172,315
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	22,397		$	21,813
Due to related party		5,566			7,026
Accrued profit sharing		6,504			4,246
Accrued liabilities		8,416			7,369
Total current liabilities		42,883			40,454
Long term liabilities:
Other long-term liabilities		6			6
Total liabilities		42,889			40,460
Stockholders’ equity:
Common stock—$0.01 par value, 100,000,000 authorized and 28,141,532 and 28,116,489 outstanding at March 31, 2013 and December 31, 2012, respectively		281			281
Additional paid-in capital		274,986			272,725
Accumulated other comprehensive income		2,472			2,500
Accumulated deficit		(133,813	)		(143,651	)
Total stockholders’ equity		143,926			131,855
Total liabilities and stockholders’ equity	$	186,815		$	172,315

See accompanying notes to condensed consolidated financial statements.

1

Sagent Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

	Three months ended March 31,
	2013			2012
Net revenue	$	60,211		$	38,280
Cost of sales		41,753			32,518
Gross profit		18,458			5,762
Operating expenses:
Product development		4,261			4,631
Selling, general and administrative		8,867			7,627
Equity in net loss of joint ventures		443			456
Total operating expenses		13,571			12,714
Termination fee		5,000			—
Income (loss) from operations		9,887			(6,952	)
Interest income and other		16			78
Interest expense		(65	)		(1,415	)
Income (loss) before income taxes		9,838			(8,289	)
Provision for income taxes		—			—
Net income (loss)	$	9,838		$	(8,289	)
Net income (loss) per common share:
Basic	$	0.35		$	(0.30	)
Diluted	$	0.34		$	(0.30	)
Weighted-average of shares used to compute net income (loss) per common share:
Basic		28,135			27,915
Diluted		28,746			27,915

See accompanying notes to condensed consolidated financial statements.

2

Sagent Pharmaceuticals, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(Unaudited)

	Three months ended March 31,
	2013			2012
Net income (loss)	$	9,838		$	(8,289	)
Other comprehensive income, net of tax
Foreign currency translation adjustments		31			225
Unrealized gains on available for sale securities		(59	)		113
Total other comprehensive (loss) income, net of tax		(28	)		338
Comprehensive income (loss)	$	9,810		$	(7,951	)

See accompanying notes to condensed consolidated financial statements

3

Sagent Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

	Three months ended March 31,
	2013			2012
Cash flows from operating activities
Net income (loss)	$	9,838		$	(8,289	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,274			1,633
Stock-based compensation		2,077			1,285
Equity in net loss of joint ventures		443			456
Dividends from unconsolidated joint ventures		926			—
Changes in operating assets and liabilities:
Accounts receivable, net		(4,233	)		4,918
Inventories		(2,667	)		(711	)
Prepaid expenses and other current assets		(247	)		(1,690	)
Due from related party		(3,292	)		483
Accounts payable and other accrued liabilities		2,780			(21,217	)
Net cash provided by (used in) operating activities		6,899			(23,132	)
Cash flows from investing activities
Capital expenditures		(92	)		(7	)
Return of principal balance of restricted cash		—			23
Investments in unconsolidated joint ventures		(11	)		(51	)
Return of capital from unconsolidated joint venture		—			228
Purchases of investments		(99,648	)		(67,401	)
Sale of investments		93,200			99,602
Purchase of product rights		(100	)		(1,360	)
Net cash (used in) provided by investing activities		(6,651	)		31,034
Cash flows from financing activities
Reduction in short-term notes payable		—			(24,867	)
Repayment of long-term debt		—			(12,273	)
Proceeds from issuance of common stock, net of issuance costs		183			90
Payment of deferred financing costs		—			(774	)
Net cash provided by (used in) financing activities		183			(37,824	)
Net increase (decrease) in cash and cash equivalents		431			(29,922	)
Cash and cash equivalents, at beginning of period		27,687			52,203
Cash and cash equivalents, at end of period	$	28,118		$	22,281

See accompanying notes to condensed consolidated financial statements

4

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 investments in Kanghong Sagent (Chengdu) Pharmaceutical Corporation Limited (“KSCP”) and in Sagent Agila LLC using the equity method of accounting, as our interest in each entity provides for joint financial and operational control. Operating results of our KSCP equity method investment are reported on a one-month lag.

You should read these statements in conjunction with our consolidated financial statements and related notes for the year ended December 31, 2012, included in our most recent Annual Report on Form 10-K filed with the SEC on March 18, 2013.

Note 2. Investments:

Our investments at March 31, 2013 were comprised of the following:

	Cost basis		Unrealized gains		Unrealized losses			Recorded basis		Cash and cash equivalents		Short term investments
Assets
Cash	$	16,502	$	—	$	—		$	16,502	$	16,502	$	—
Money market funds		11,616		—		—			11,616		11,616		—
Commercial paper		11,099		—		(3	)		11,096		—		11,096
Corporate bonds and notes		31,809		3		(47	)		31,765		—		31,765
	$	71,026	$	3	$	(50	)	$	70,979	$	28,118	$	42,861

Investments with continuous unrealized losses for less than twelve months and their related fair values were as follows:

	Fair value		Unrealized losses
Commercial paper	$	11,096	$	(3	)
Corporate bonds and notes		23,868		(47	)
	$	34,964	$	(50	)

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, 2013.

5

The original cost and estimated current fair value of our fixed-income securities are set forth below.

	Cost basis		Estimated fair value
Due in one year or less	$	25,498	$	25,488
Due between one and five years		17,410		17,373
	$	42,908	$	42,861

Note 3. Inventories:

Inventories at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013								December 31, 2012
	Approved			Pending regulatory approval		Inventory			Approved			Pending regulatory approval		Inventory
Finished goods	$	48,809		$	1,641	$	50,450		$	46,410		$	1,437	$	47,847
Raw materials		2,354			—		2,354			1,280			—		1,280
Inventory reserve		(3,031	)		—		(3,031	)		(2,021	)		—		(2,021	)
	$	48,132		$	1,641	$	49,773		$	45,669		$	1,437	$	47,106

Note 4. Intangible assets, net:

Intangible assets at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013							December 31, 2012
	Gross  carrying amount		Accumulated amortization			Intangible assets, net		Gross  carrying amount		Accumulated amortization			Intangible assets, net
Product licensing rights	$	3,256	$	(1,667	)	$	1,589	$	3,156	$	(1,541	)	$	1,615
Product development rights		1,382		—			1,382		2,662		—			2,662
	$	4,638	$	(1,667	)	$	2,971	$	5,818	$	(1,541	)	$	4,277

Movements in intangible assets were due to the following:

	Product licensing rights			Product development rights
December 31, 2012	$	1,615		$	2,662
Purchase of product rights		100			—
Amortization of product rights		(126	)		(1,280	)
March 31, 2013	$	1,589		$	1,382

The weighted-average period prior to the next extension or renewal for the 18 products comprising our product licensing rights intangible asset was 62 months at March 31, 2013.

6

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

	Amortization expense
For the year ending:
March 31, 2014	$	1,793
March 31, 2015		340
March 31, 2016		158
March 31, 2017		120
March 31, 2018		110

Note 5. Investment in Sagent Agila:

Changes in our investment in Sagent Agila during the three months ended March 31, 2013 were as follows:

Investment in Sagent Agila at January 1, 2013	$	2,161
Equity in net income of Sagent Agila		541
Dividend paid		(926	)
Investment in Sagent Agila at March 31, 2013	$	1,776

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

	Three months ended March 31,
Condensed statement of operations information	2013		2012
Net revenues	$	5,629	$	5,690
Gross profit		1,444		1,446
Net income		1,083		1,256

Note 6. Investment in KSCP:

Changes in our investment in KSCP during the three months ended March 31, 2013 were as follows:

Investment in KSCP at January 1, 2013	$	17,461
Equity in net loss of KSCP		(984	)
Currency translation adjustment		31
Investments in KSCP		11
Investment in KSCP at March 31, 2013	$	16,519

Condensed statement of operations information of KSCP is presented below.

	Three months ended March 31,
Condensed statement of operations information	2013			2012
Net revenues	$	—		$	—
Gross profit		—			—
Net loss		(1,799	)		(1,459	)

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Note 7. Accrued liabilities:

Accrued liabilities at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013		December 31, 2012
Payroll and employee benefits	$	2,460	$	1,211
Sales and marketing		5,501		5,649
Other accrued liabilities		455		509
	$	8,416	$	7,369

Note 8. Fair value measurements:

Assets measured at fair value on a recurring basis as of March 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	$	11,616	$	11,616	$	—	$	—
Corporate bonds and notes		31,765		—		31,765		—
Commercial paper		11,096		—		11,096		—
Short-term investments	$	42,861	$	—	$	42,861	$	—
Total assets	$	54,477	$	11,616	$	42,861	$	—

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.

Assets measured at fair value on a recurring basis as of December 31, 2012 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	$	18,141	$	18,141	$	—	$	—
Corporate bonds and notes		13,358		—		13,358		—
Commercial paper		23,247		—		23,247		—
Short-term investments	$	36,605	$	—	$	36,605	$	—
Total assets	$	54,746	$	18,141	$	36,605	$	—

There were no transfers of assets between Level 1 and Level 2 during the periods presented.

8

Note 9. Accumulated other comprehensive income:

Accumulated other comprehensive income at March 31, 2013 and December 31, 2012 is comprised of the following:

	March 31, 2013			December 31, 2012
Currency translation adjustment, net of tax	$	2,519		$	2,488
Unrealized (losses) gains on available for sale securities, net of tax		(47	)		12
Total accumulated other comprehensive income	$	2,472		$	2,500

Note 10. Earnings per share:

Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Because of their anti-dilutive effect, 735,843 and 2,451,290 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, 2013 and 2012, respectively.

The table below presents the computation of basic and diluted earnings per share for the three months ended March 31, 2013 and 2012:

	Three months ended March 31,
	2013		2012
Basic and dilutive numerator:
Net income (loss), as reported	$	9,838	$	(8,289	)
Denominator:
Weighted-average common shares outstanding - basic (in thousands)		28,135		27,915
Net effect of dilutive securities:
Stock options and restricted stock		611		—
Weighted-average common shares outstanding - diluted (in thousands)		28,746		27,915
Net income (loss) per common share (basic)	$	0.35	$	(0.30	)
Net income (loss) per common share (diluted)	$	0.34	$	(0.30	)

Note 11. Stock-based compensation:

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. We granted 192,850 stock options, 13,608 restricted stock units and 34,050 restricted stock awards during the three months ended March 31, 2012. There were 25,043 and 19,391 stock options exercised during the three months ended March 31, 2013 and 2012, respectively, with an aggregate intrinsic value of $236 and $344, respectively.

Note 12. Net revenue by product:

Net revenue by product line is as follows:

	Three months ended March 31,
	2013		2012
Therapeutic class:
Anti-infective	$	22,179	$	17,247
Critical care		19,088		17,511
Oncology		18,944		3,522
	$	60,211	$	38,280

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Note 13. Related party transactions:

As of March 31, 2013 and December 31, 2012, respectively, we had a receivable of $2,540 and $1,404 from Sagent Agila LLC, which is expected to offset future profit-sharing payments. As of March 31, 2013 and December 31, 2012, respectively, we had a payable of $5,566 and $7,026 to Sagent Agila LLC, principally for the acquisition of inventory and amounts due under profit-sharing arrangements. During the three months ended March 31, 2013, Sagent Agila LLC distributed $1,852 of profit sharing receipts to its joint venture partners.

In March 2013, we committed to funding cash shortfalls of our KSCP joint venture through September 30, 2013 while discussions occur between the two joint venture partners on the long-term strategic direction of the facility. As of March 31, 2013, we had a receivable of $2,190 from KSCP for the acquisition of certain raw material inventory on behalf of KSCP and a prepayment of certain finished goods inventory.

Note 14. 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 will receive 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. These proceeds are included in Termination fee in our Condensed Consolidated Statement of Operations for the three months ended March 31, 2013.

Note 15. 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, alleging, among other things, that sales of the Company’s (i) zoledronic acid premix bag (4mg/100ml), 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), a generic version of Novartis’ Reclast^® ready to use bottle would infringe U.S. Patent No. 8,052,987 and the 241 Patent (Novartis Pharmaceuticals Corporation v. Actavis, LLC, et. al., Case No. 13-cv-1028). The suit, which also named Actavis as a defendant, alleged, among other things, that the sale of Actavis’ zoledronc acid vial (4mg/5ml), 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 against the Company and the other defendants, including Actavis. On March 6, 2013, the Company, began selling Actavis’ zoledronic acid vial, the generic version of Zometa^®. The Company believes it has substantial meritorious defenses to the case. However, the Company has sold and is continuing to sell Actavis’ zoledronic acid vial, the generic version of Zometa^®. Therefore, an adverse final determination that one of the patents is valid and infringed could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Note 16. Subsequent events:

On April 30, 2013, we entered into a Share Purchase Agreement with Chengdu Kanghong Pharmaceuticals (Group) Co. Ltd. (“Kanghong”) pursuant to which we agreed to acquire Kanghong’s 50% interest in KSCP in exchange for $25 million, payable in installments through September 2015. The acquisition is subject to customary closing conditions, including certain regulatory approvals. Upon completion of the acquisition, KSCP will become a wholly-owned subsidiary, and KSCP’s assets and liabilities, as well as its financial results, will be reported on a consolidated basis, rather than using the equity method of accounting to report our share of KSCP’s net income or net loss.

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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 18, 2013. 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 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; and our ability to meet our obligations under our Revolving Credit Facility with Silicon Valley Bank.

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 18, 2013, 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 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 and our profitability could be delayed or otherwise negatively impacted;

• 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 profitability could be delayed or otherwise negatively impacted;

• 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 profitability could be delayed or otherwise negatively impacted;

• three of our products, heparin, levofloxacin in pre-mix bags, and zoledronic acid 4mg vials, each of which is supplied to us by a single vendor, represent a significant portion of our net revenues and, 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 profitability could be delayed or otherwise negatively impacted;

• if we are unable to maintain our group purchasing organizations and distributor relationships, our revenues could decline and future profitability could be delayed or otherwise negatively impacted;

• 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;

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• 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;

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

• current and future decline of national and international economic conditions could adversely affect our operations;

• 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 be unable to consummate our pending acquisition of our joint venture partner’s interest in our KSCP joint venture in China;

• we may never realize the expected benefits from our investment in our KSCP joint venture in China and may be required to make additional capital investments in KSCP to continue its operations; and

• 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 pharmaceutical products, with a specific emphasis on injectables, which we sell primarily in the United States of America through our highly experienced sales and marketing team.

With a primary focus on generic injectable pharmaceuticals, 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, pre-filled ready-to-use 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 previously 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, which 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.

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 Condensed Consolidated Statements of Operations. We believe that Adjusted Gross Profit is relevant and useful supplemental information for our

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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,
	2013		2012		$ Change			% Change			2013			2012			% Change
Adjusted Gross Profit	$	19,180	$	6,485	$	12,695			196	%		31.9	%		16.9	%		15.0	%
Sagent portion of gross profit earned by Sagent Agila joint venture		722		723		(1	)		-0	%		1.2	%		1.9	%		-0.7	%
Gross Profit	$	18,458	$	5,762	$	12,696			220	%		30.7	%		15.1	%		15.6	%

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 (loss) less interest expense, net of interest income, provision for income taxes, depreciation and amortization. We define Adjusted EBITDA as net loss 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 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 (loss). The best way that these limitations can be addressed is by using EBITDA and Adjusted EBITDA in combination with our GAAP reported net income (loss). 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 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 (loss) for the periods presented (dollars in thousands).

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	Three months ended March 31,
	2013		2012			$ Change			% Change
Adjusted EBITDA	$	14,201	$	(3,317	)	$	17,518			528	%
Stock-based compensation expense		2,077		1,285			792			62	%
Equity in net loss of KSCP joint venture		984		1,084			(100	)		-9	%
EBITDA	$	11,140	$	(5,686	)	$	16,826			296	%
Depreciation and amortization expense1		1,253		1,188			65			5	%
Interest expense, net		49		1,415			(1,366	)		-97	%
Provision for income taxes		—		—			—			0	%
Net income (loss)	$	9,838	$	(8,289	)	$	18,127			219	%

¹ Amortization expense excludes $21 and $445 of amortization in the three months ended March 31, 2013 and 2012, 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, 2013 and 2012.

Discussion and Analysis

Consolidated results of operations

The following compares our consolidated results of operations for the three months ended March 31, 2013 with those of the three months ended March 31, 2012:

	Three months ended March 31,
	2013			2012			$ change			% change
Net revenue	$	60,211		$	38,280		$	21,931			57	%
Cost of sales		41,753			32,518			9,235			28	%
Gross profit		18,458			5,762			12,696			220	%
Gross profit as % of net revenues		30.7	%		15.1	%
Operating expenses:
Product development		4,261			4,631			(370	)		-8	%
Selling, general and administrative		8,867			7,627			1,240			16	%
Equity in net loss of joint ventures		443			456			(13	)		-3	%
Total operating expenses		13,571			12,714			857			7	%
Termination fee		5,000			—			5,000			n/m
Income (loss) from operations		9,887			(6,952	)		16,839			242	%
Interest income and other		16			78			(62	)		-79	%
Interest expense		(65	)		(1,415	)		1,350			95	%
Income (loss) before income taxes		9,838			(8,289	)		18,127			219	%
Provision for income taxes		—			—			—			—
Net income (loss)	$	9,838		$	(8,289	)	$	18,127			219	%
Net income (loss) per common share:
Basic	$	0.35		$	(0.30	)	$	0.65			217	%
Diluted	$	0.34		$	(0.30	)	$	0.64			213	%

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Net revenue: Net revenue for the three months ended March 31, 2013 totaled $60.2 million, an increase of $21.9 million, or 57%, as compared to $38.3 million for the three months ended March 31, 2012. The launch of 32 new codes or presentations of 16 products since March 31, 2012, including zoledronic acid at market formation, contributed $21.3 million of the net revenue increase in the first quarter of 2013. Net revenue for products launched prior to March 31, 2012 increased $0.7 million, or 2%, to $38.9 million in the first quarter of 2013 due to increased volumes, especially on our levofloxacin products, partially offset by lower pricing and the prior year sale of certain short-dated heparin inventories.

Cost of sales: Cost of goods sold for the three months ended March 31, 2013 totaled $41.8 million, an increase of $9.2 million, or 28%, as compared to $32.5 million for the three months ended March 31, 2012. Gross profit as a percentage of net revenues was 30.7% for the three months ended March 31, 2013 compared to 15.1% for the three months ended March 31, 2012. Adjusted Gross Profit as a percentage of net revenue was 31.9% for the three months ended March 31, 2013, and 16.9% for the three months ended March 31, 2012. The increase in both gross profit and Adjusted Gross Profit is primarily due to the introduction of higher margin products, in the past twelve months, particularly zoledronic acid at market formulation in March 2013.

Product development: Product development expense for the three months ended March 31, 2013 totaled $4.3 million, a decrease of $0.4 million, or 8%, as compared to $4.6 million for the three months ended March 31, 2012. The decrease in product development expense was primarily due to the timing of milestone payments and FDA filing fees related to our development programs.

As of March 31, 2013, our new product pipeline included 39 products represented by 65 ANDAs which we had filed, or licensed rights to, that were under review by the FDA and three products represented by six ANDAs that have been recently approved and were pending commercial launch. We expect to launch more than half of these new products by the end of 2014. Also, we had an additional 15 products represented by 27 ANDAs under initial development at March 31, 2013.

Selling, general and administrative: Selling, general and administrative expenses for the three months ended March 31, 2013, totaled $8.9 million, an increase of $1.2 million, or 16%, as compared to $7.6 million for the three months ended March 31, 2012. The increase in selling, general and administrative expense was primarily due to increases in non-cash stock compensation expense. Selling, general and administrative expense as a percentage of net revenue was 15% and 20% for the three months ended March 31, 2013 and 2012, respectively.

Equity in net loss of joint ventures: Equity in net loss of joint ventures for the three months ended March 31, 2013 totaled $0.4 million, a decrease of less than $0.1 million, or 3%, as compared to $0.5 million for the three months ended March 31, 2012. Included in this amount are the following (in thousands of dollars).

	Three Months Ended March 31,
	2013			2012
Sagent Agila LLC – Earnings directly related to the sale of product	$	(722	)	$	(723	)
Sagent Agila LLC – Product development costs		181			95
KSCP – net loss		984			1,084
Equity in net loss of joint ventures	$	443		$	456

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, 2013 totaled $0.1 million, a decrease of $1.3 million, or 95%, as compared to $1.4 million for the three months ended March 31, 2012. The decrease was principally due to $1.1 million of deferred financing costs incurred in connection with the early termination and partial extinguishment of our former senior secured revolving and term loan credit facilities in February 2012.

Provision for income taxes: We have generated tax losses since inception and do not believe that it is more likely than not that our net operating loss carryforwards and other deferred tax assets will be utilized. As a result, we have decided that a full valuation allowance is required against our deferred tax assets. Because none of our current net operating loss carryforwards expire before 2027, we expect that we will have a reasonable opportunity to utilize all of these loss carryforwards before they expire, but such loss carryforwards will be usable only to the extent that we generate sufficient taxable income.

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Net income (loss) and diluted net earnings (loss) per common share: The net income for the three months ended March 31, 2013 of $9.8 million increased by $18.1 million, or 219%, from the $8.3 million net loss for the three months ended March 31, 2012. Diluted net earnings (loss) per common share increased by $0.64, or 213%. The increase in diluted net earnings (loss) per common share is due to the following factors:

Diluted EPS for the three months ended March 31, 2012	$	(0.30	)
Increase in operations		0.63
Increase in common shares outstanding		0.01
Diluted EPS for the three months ended March 31, 2013	$	0.34

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 42 products that are represented by our 71 ANDAs that have been recently approved and are pending commercial launch or are pending approval by the FDA as of March 31, 2013, successfully identifying and sourcing other new product opportunities, and business acquisition activity.

Based on our existing business plan, we expect that cash, cash equivalents and short-term investments of approximately $71.0 million as of March 31, 2013, together with borrowings available under our revolving loan facility, will be sufficient to fund our planned operations, including the continued development of our product pipeline and the acquisition of our joint venture partner’s interest in KSCP, 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 regulatory environment or the loss of key relationships with suppliers, group purchasing organizations or end-user customers.

If required, additional funding may not be available to us on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities or by selling convertible debt securities, further dilution to our existing stockholders may result. 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.

If adequate funds are not available, we may be required to terminate, significantly modify or delay the development or commercialization of new products. 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, 2013, cash and cash equivalents on hand totaled $28.1 million. Short-term investments, generally investment grade commercial paper or corporate debt securities with a remaining term of two years or less, totaled $42.9 million. Working capital totaled $121.5 million and our current ratio (current assets to current liabilities) was approximately 3.8 to 1.0.

Sources and Uses of Cash

Operating activities: Net cash provided by operating activities was $6.9 million for the three months ended March 31, 2013, compared with net cash used in operating activities of $23.1 million during the three months ended March 31, 2012. The increase in cash provided by operations was primarily due to the $18.1 million increase in earnings and the reduction of cash used to repay accounts payables and other accrued liabilities in the three months ended March 31, 2013, as we had used $21.2 million in the three months ended March 31, 2012 to reduce our outstanding accounts payable.

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Investing activities: Net cash used in investing activities was $6.7 million for the three months ended March 31, 2013, compared to net cash provided by investing activities of $31.0 million during the three months ended March 31, 2012. The change in cash flows from investing activities in the three months ended March 31, 2013 relates primarily to the net change in our short-term investments. We generated $32.2 million of proceeds from short-term investments to repay in full all amounts due under our former term loan and senior secured revolving credit facilities in the three months ended March 31, 2012.

Financing activities: Net cash provided by financing activities was $0.2 million for the three months ended March 31, 2013, related to proceeds from stock option exercises. Net cash used in financing activities was $37.8 million for the three months ended March 31, 2012, primarily related to the repayment in full of all outstanding amounts due under our former term loan and senior secured revolving credit facilities.

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 subject to a borrowing base consisting of eligible accounts receivable and inventory and the satisfaction of 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 operating subsidiary’s assets, other than our equity interests in our joint ventures and certain other limited exceptions.

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.

As of March 31, 2013, 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.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

As of March 31, 2013, there were no material changes to the contractual obligations information provided in our Annual Report on Form 10-K, filed with the SEC on March 18, 2013.

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;

• Inventories;

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• 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, 2012 included in our Annual Report on Form 10-K filed with the SEC on March 18, 2013.

There have been no other material changes to the Company’s critical accounting policies and estimates since December 31, 2012.

New Accounting Guidance

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

Contingencies

See Note 15. 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. 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, 2013, there is no impact related to potential changes in the LIBOR rate on our interest expense at March 31, 2013. We historically have not engaged in interest rate hedging activities related to our interest rate risk.

At March 31, 2013, we had cash and cash equivalents and short-term investments of $28.1 million and $42.9 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.

While we operate primarily in the U.S., we do have foreign currency considerations. We generally incur sales and pay our expenses in U.S. dollars. Our KSCP joint venture and 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 they generally incur their respective operating expenses in local currencies. As a result, these business partners may be exposed to currency rate fluctuations and experience an effective increase in their operating expenses in the event their local currency appreciates against the U.S. dollar. In this event, 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.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, 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

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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, 2013. We determined that there were no changes in our internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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. At this time, there are no proceedings of which management is aware that are expected to have a material adverse effect on our consolidated financial position or results of operations.

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, alleging, among other things, that sales of the Company’s (i) zoledronic acid premix bag (4mg/100ml), 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), a generic version of Novartis’ Reclast^® ready to use bottle would infringe U.S. Patent No. 8,052,987 and the 241 Patent (Novartis Pharmaceuticals Corporation v. Actavis, LLC, et. al., Case No. 13-cv-1028). The suit, which also named Actavis as a defendant, alleged, among other things, that the sale of Actavis’ zoledronc acid vial (4mg/5ml), 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 against the Company and the other defendants, including Actavis. On March 6, 2013, the Company, began selling Actavis’ zoledronic acid vial, the generic version of Zometa^®. The Company believes it has substantial meritorious defenses to the case. However, the Company has sold and is continuing to sell Actavis’ zoledronic acid vial, the generic version of Zometa^®. Therefore, an adverse final determination that one of the patents is valid and infringed could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.

Item 1A. Risk Factors.

There were no material changes during the three months ended March 31, 2013 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 18, 2013.

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

Issuer Purchases of Equity Securities during the Quarter ended March 31, 2013

There are currently no share repurchase programs authorized by our Board of Directors.

Recent Sales of Unregistered Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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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)).
10.1*	Employment Agreement, dated as of March 25, 2013, by and between Sagent Pharmaceuticals, Inc. and James M. Hussey.
10.2*	Offer Letter, dated March 12, 2013, by and between Sagent Pharmaceuticals, Inc. and James M. Hussey.
10.3	Share Purchase Agreement, dated April 30, 2013, by and between Sagent Pharmaceuticals, Inc. and Chengdu Kanghong Pharmaceuticals (Group) Co. Ltd. (Incorporated by reference to Exhibit 10.1 to the Form 8-K filed May 6, 2013.)
10.4	Share Pledge Agreement, dated April 30, 2013, by and between Sagent Pharmaceuticals, Inc. and Chengdu Kanghong Pharmaceuticals (Group) Co. Ltd. (Incorporated by reference to Exhibit 10.2 to the Form 8-K filed May 6, 2013.)
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, 2013 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012, (ii) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012, (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2013 and 2012, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012, (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text and (vi) document and entity information.

* Filed herewith

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101.1 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 133, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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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, 2013

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EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of this 13^th day of March, 2013 (the “Effective Date”), by and between Sagent Pharmaceuticals, Inc., a Wyoming corporation (the “Employer” or the “Company”), and James M. Hussey, an individual (the “Executive”).

WHEREAS, the Executive is employed as the President; and

WHEREAS, the Employer and the Executive desire to enter into this Agreement to set out the terms and conditions for the continued employment relationship of the Executive with the Employer.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:

1. Employment Agreement. On the terms and conditions set forth in this Agreement, the Employer agrees to continue to employ the Executive and the Executive agrees to continue to be employed by the Employer for the Employment Period set forth in Section 2 and in the positions and with the duties set forth in Section 3. Terms used herein with initial capitalization not otherwise defined are defined in Section 26.

2. Term. The initial term of employment under this Agreement shall be for a three-year period commencing on the Effective Date (the “Initial Term”). The term of employment shall be automatically extended for an additional consecutive 12-month period (the “Extended Term”) on the third anniversary of the Effective Date and each subsequent anniversary thereof, unless and until the Employer or Executive provides written notice to the other party in accordance with Section 14 hereof not less than 60 days before such anniversary date that such party is electing not to extend the term of employment under this Agreement (“Non-Renewal”), in which case the term of employment hereunder shall end as of the end of such Initial Term or Extended Term, as the case may be, unless sooner terminated as hereinafter set forth. Such Initial Term and all such Extended Terms are collectively referred to herein as the “Employment Period.” Anything herein to the contrary notwithstanding, if on the date of a Change in Control the remaining term of the Employment Period is less than 24 months, the Employment Period shall be automatically extended to the end of the 24-month period following such Change in Control.

3. Position and Duties. During the Employment Period, the Executive shall serve as the President. In such capacities, the Executive shall report exclusively to the Chief Executive Officer and shall have the duties, responsibilities and authorities customarily associated with such position(s) in a company the size and nature of the Employer. The Executive shall devote

the Executive’s reasonable best efforts and full business time to the performance of the Executive’s duties hereunder and the advancement of the business and affairs of the Employer; provided that the Executive shall be entitled to serve as a member of the board of directors of a reasonable number of other companies, to serve on civic, charitable, educational, religious, public interest or public service boards, and to manage the Executive’s personal and family investments, in each case, to the extent such activities do not materially interfere with the performance of the Executive’s duties and responsibilities hereunder.

4. Place of Performance. During the Employment Period, the Executive shall be based primarily at the Employer’s headquarters in Schaumburg, IL, except for reasonable travel on the Employer’s business consistent with the Executive’s position.

5. Compensation and Benefits; Options; Change in Control.

(a) Base Salary. During the Employment Period, the Employer shall pay to the Executive a base salary (the “Base Salary”) at the rate of no less than $420,000 per calendar year, less applicable deductions, and prorated for any partial year. The Base Salary shall be reviewed for increase by the Employer no less frequently than annually and shall be increased in the discretion of the Employer and any such adjusted Base Salary shall constitute the “Base Salary” for purposes of this Agreement. The Base Salary shall be paid in substantially equal installments in accordance with the Employer’s regular payroll procedures. The Executive’s Base Salary may not be decreased during the Employment Period.

(b) Annual Bonus. For each calendar year ending during the Employment Period, the Executive shall be paid an annual cash performance bonus (an “Annual Bonus”), to the extent earned based on performance against objective, reasonably attainable performance criteria; provided that subjective criteria may be used to determine the Executive’s Annual Bonus to the extent the Company’s Chief Executive Officer agrees to the use of non-subjective performance measures. The performance criteria for any particular calendar year shall be determined in good faith by the Board, after consultation with the Employer’s Chief Executive Officer, no later than sixty (60) days after the commencement of the relevant bonus period. The Executive’s annual bonus opportunity for a calendar year shall equal 50% of the Executive’s Base Salary (the “Target Bonus”) for that year if target levels of performance for that year are achieved, and shall be adjusted in accordance with the Company’s annual bonus plan applicable to senior executives generally to the extent that the applicable target performance criteria is not achieved or is exceeded. The Executive’s Annual Bonus for a bonus period shall be determined by the Board in accordance with this Section 5(b) after the end of the applicable bonus period and shall be paid to the Executive when annual bonuses for that year are paid to other senior executives of the Employer generally, but in no event later than March 15 of the year following the year to which such Annual Bonus relates. In carrying out its functions under this Section 5(b), the Board shall at all times act uniformly, reasonably and in good faith.

(c) Vacation; Benefits. During the Employment Period, the Executive shall be entitled to vacation in accordance with the Employer’s policies then in effect. In addition, the Employer shall provide to the Executive employee benefits and perquisites on a basis that is

comparable in all material respects to that provided to other executives of the Employer. Subject to the terms of this Agreement, the Employer shall have the right to change insurance carriers and to adopt, amend, terminate or modify employee benefit plans and arrangements at any time and without the consent of the Executive.

6. Expenses. The Executive is expected and is authorized to incur reasonable expenses in the performance of his duties hereunder. The Employer shall reimburse the Executive for all such expenses reasonably and actually incurred in accordance with policies which may be adopted from time to time by the Employer promptly upon periodic presentation by the Executive of an itemized account, including reasonable substantiation, of such expenses.

7. Confidentiality, Non-Disclosure and Non-Competition Agreement. The Employer and the Executive acknowledge and agree that during the Executive’s employment with the Employer, the Executive will have access to and may assist in developing Company Confidential Information and will occupy a position of trust and confidence with respect to the Employer’s affairs and business and the affairs and business of the Company Affiliates. The Executive agrees that the following obligations are necessary to preserve the confidential and proprietary nature of Company Confidential Information and to protect the Employer and the Company Affiliates against harmful solicitation of employees and customers, harmful competition and other actions by the Executive that would result in serious adverse consequences for the Employer and the Company Affiliates:

(a) Non-Disclosure. During and after the Executive’s employment with the Employer, the Executive will not knowingly use, disclose or transfer any Company Confidential Information other than as authorized in writing by the Employer or within the scope of the Executive’s duties with the Employer as determined reasonably and in good faith by the Executive. Anything herein to the contrary notwithstanding, the provisions of this Section 7(a) shall not apply (i) when disclosure is required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with actual or apparent jurisdiction to order the Executive to disclose or make accessible any information; (ii) with respect to any other litigation, arbitration or mediation involving this Agreement, including, but not limited to, the enforcement of this Agreement; (iii) as to information that becomes generally known to the public or within the relevant trade or industry other than due to the Executive’s violation of this Section 7(a); (iv) as to information that is or becomes available to the Executive on a non-confidential basis from a source which is entitled to disclose it to the Executive; or (v) as to information that the Executive possessed prior to the commencement of employment with the Employer.

(b) Materials. The Executive will not remove any Company Confidential Information or any other property of the Employer or any Company Affiliate from the Employer’s premises or make copies of such materials except for normal and customary use in the Employer’s business as determined reasonably and in good faith by the Executive. The Employer acknowledges that the Executive, in the ordinary course of the Executive’s duties, routinely uses and stores Company Confidential Information at home and other locations. The Executive will return to the Employer all Company Confidential Information and copies thereof

and all other property of the Employer or any Company Affiliate at any time upon the request of the Employer and in any event promptly after termination of Executive’s employment. The Executive agrees to attempt in good faith to identify and return to the Employer any copies of any Company Confidential Information after the Executive ceases to be employed by the Employer. Anything to the contrary notwithstanding, nothing in this Section 7 shall prevent the Executive from retaining a home computer, papers and other materials of a personal nature, including diaries, calendars and Rolodexes, information relating to his compensation or relating to reimbursement of expenses, information that he reasonably believes may be needed for tax purposes, and copies of plans, programs and agreements relating to his employment.

(c) No Solicitation or Hiring of Employees. During the Non-Compete Period, the Executive shall not solicit, entice, persuade or induce any individual who is employed by the Employer or the Company Affiliates (or who was so employed within 180 days prior to the Executive’s action) to terminate or refrain from continuing such employment or to become employed by or enter into contractual relations with any other individual or entity other than the Employer or the Company Affiliates, and the Executive shall not hire, directly or indirectly, as an employee, consultant or otherwise, any such person. Anything to the contrary notwithstanding, the Employer agrees that (i) the Executive’s responding to an unsolicited request from any former employee of the Employer for advice on employment matters; and (ii) the Executive’s responding to an unsolicited request for an employment reference regarding any former employee of the Employer from such former employee, or from a third party, by providing a reference setting forth his personal views about such former employee, shall not be deemed a violation of this Section 7(c)). Notwithstanding the foregoing, this Section 7(c) shall not preclude the Executive from soliciting for employment or hiring any person who has been discharged by the Employer or any Company Affiliate without cause.

(d) Non-Competition.

(i) During the Non-Compete Period, the Executive shall not, directly or indirectly, (A) solicit or encourage any client or customer of the Employer or a Company Affiliate, or any person or entity who was such a client or customer within 180 days prior to Executive’s action to terminate, reduce or alter in a manner adverse to the Employer or the Company Affiliate, any existing business arrangements with the Employer or a Company Affiliate or to transfer existing business from the Employer or a Company Affiliate to any other person or entity, (B) provide services to any entity if (I) the entity competes with the Employer or any direct or indirect subsidiary of the Employer by engaging in any business engaged in by the Employer or any direct or indirect subsidiary of the Employer, or (II) the services to be provided by the Executive are competitive with the Employer or any direct or indirect subsidiary of the Employer and substantially similar to those previously provided by the Executive to the Employer; provided, however, that following a Change in Control this Section 7(d)(i)(B) shall not apply to the Executive, or (C) own an interest in any entity described in Section 7(d)(i)(B)(I) immediately above; provided, however, that Executive may own, as a passive investor, securities of any such entity that has outstanding publicly traded securities so long as the Executive’s direct holdings in any such entity shall not in the aggregate constitute more than 5% of the voting power of such entity. The Executive agrees that, before providing services, whether as an

employee or consultant, to any entity during the Non-Compete Period, the Executive will provide a copy of this Agreement to such entity, and such entity shall acknowledge to the Employer in writing that it has read this Agreement. The Executive acknowledges that this covenant has a unique, very substantial and immeasurable value to the Employer, that the Executive has sufficient assets and skills to provide a livelihood for the Executive while such covenant remains in force and that, as a result of the foregoing, in the event that the Executive breaches such covenant, monetary damages would be an insufficient remedy for the Employer and equitable enforcement of the covenant would be proper.

(ii) If the restrictions contained in Section 7(d)(i) shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, Section 7(d)(i) shall be modified to be effective for the maximum period of time for which it may be enforceable and over the maximum geographical area as to which it may be enforceable and to the maximum extent in all other respects as to which it may be enforceable.

(e) Publicity. During the Employment Period, the Executive hereby grants to the Employer the right to use, in a reasonable and appropriate manner, the Executive’s name and likeness, without additional consideration, on, in and in connection with technical, marketing or disclosure materials, or any combination thereof, published by or for the Employer or any Company Affiliate.

(f) Enforcement. The Executive acknowledges that in the event of any breach of this Section 7, the business interests of the Employer and the Company Affiliates will be irreparably injured, the full extent of the damages to the Employer and the Company Affiliates will be impossible to ascertain, monetary damages will not be an adequate remedy for the Employer and the Company Affiliates, and the Employer will be entitled to enforce this Agreement by a temporary, preliminary and/or permanent injunction or other equitable relief, without the necessity of posting bond or security, which the Executive expressly waives. The Executive understands that the Employer may waive some of the requirements expressed in this Agreement, but that such a waiver to be effective must be made in writing and should not in any way be deemed a waiver of the Employer’s right to enforce any other requirements or provisions of this Agreement. The Executive agrees that each of the Executive’s obligations specified in this Agreement is a separate and independent covenant and that the unenforceability of any of them shall not preclude the enforcement of any other covenants in this Agreement. The Executive further agrees that any breach of this Agreement by the Employer prior to the Date of Termination shall not release the Executive from compliance with the Executive’s obligations under this Section 7, so along as the Employer fully complies with Sections 9, 10, 11 and 12. The Employer further agrees that any breach of this Agreement by the Executive that does not result in the Executive’s being terminated for Cause, other than a willful (as defined in the definition of “Cause”) and material breach of Sections 7(d)(i)(A) or 7(d)(i)( B) after the Date of Termination, shall not release the Employer from compliance with its obligations under this Agreement. Notwithstanding the foregoing two sentences, neither party shall be precluded from pursuing judicial remedies as a result of any such breaches.

8. Termination of Employment.

(a) Permitted Terminations. The Executive’s employment hereunder may be terminated during the Employment Period under the following circumstances:

(i) Death. The Executive’s employment hereunder shall terminate automatically upon the Executive’s death;

(ii) By the Employer. The Employer may terminate the Executive’s employment:

(A) Disability. If the Executive shall have been substantially unable to perform the Executive’s material duties hereunder by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for 180 consecutive days or 270 days in any 24-month period (a “Disability”) (provided, that until such termination, the Executive shall continue to receive the Executive’s compensation and benefits hereunder, reduced by any benefits payable to the Executive under any applicable disability insurance policy or plan); or

(B) Cause. For Cause or without Cause;

(iii) By the Executive. The Executive may terminate the Executive’s employment for any reason (including Good Reason) or for no reason.

(b) Termination. Any termination of the Executive’s employment by the Employer or the Executive (other than because of the Executive’s death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 13 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicates the specific termination provision in this Agreement relied upon, if any, and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Termination of the Executive’s employment shall take effect on the Date of Termination. The Executive agrees, in the event of any dispute under Section 8(a)(ii)(A) as to whether a Disability exists, and if requested by the Employer, to submit to a physical examination by a licensed physician selected by mutual consent of the Employer and the Executive, the cost of such examination to be paid by the Employer. The written medical opinion of such physician shall be conclusive and binding upon each of the parties hereto as to whether a Disability exists and the date when such Disability arose. This Section shall be interpreted and applied so as to comply with the provisions of the Americans with Disabilities Act and any applicable state or local laws.

9. Compensation Upon Termination.

(a) Termination by the Employer for Cause or Termination by the Executive without Good Reason. If, during the Employment Period, the Employer terminates the Executive’s employment for Cause pursuant to Section 8(a)(ii)(B) or the Executive terminates his employment without Good Reason, the Employer shall pay to the Executive the Accrued Benefits. Except as set forth herein, the Employer shall have no further obligations to the Executive under this Agreement.

(b) Termination due to Death or Disability, Termination by the Employer without Cause or Termination by the Executive with Good Reason. Subject to Section 9(c), if the Executive’s employment is terminated during the Employment Period (i) due to the Executive’s death or Disability, (ii) by the Employer for a reason other than for Cause or (iii) by the Executive with Good Reason (any termination described in clauses (i), (ii) or (iii), a “Qualifying Termination”) then (A) the Employer shall pay the Executive (I) the Accrued Benefits, (II) a pro rata portion (based on the number of days during the applicable fiscal period prior to the Date of Termination) of the Annual Bonus the Executive would have earned absent such termination, with such payment to be made at the time bonus payments are made to executives of the Company generally, and (III) a cash lump sum in an amount equal to the product of one and the sum of the Executive’s Base Salary and Target Bonus (the “Cash Severance Payment”); (B) provided the Executive elects continued welfare coverage pursuant to COBRA, the Company shall pay during the period the Executive actually continues such coverage, but in any event not to exceed 18 months, the same percentage of the monthly premium costs for COBRA continuation coverage as it pays of the monthly premium costs for medical coverage for senior executives generally; provided that the Company may pay this amount by paying the Executive a monthly amount equal on an after-tax basis to such amount (the “Monthly Payments”); and (C) the Company shall reimburse the Executive for reasonable outplacement services (which shall not exceed $30,000 in the aggregate) incurred during the two-year period following the Date of Termination.

(c) Change in Control. This Section 9(c) shall apply if (i) the Executive’s employment with the Company is terminated due to a Qualifying Termination during the Employment Period in the two-year period following a Change in Control; or (ii) there is a termination of the Executive’s employment by the Employer for a reason other than for Cause or due to the Executive’s Disability prior to a Change in Control, if the termination was at the request of a third party or otherwise arose in anticipation of a Change in Control (a termination described in either clause (i) or clause (ii), a “CIC Termination”). If any such termination occurs, (A) the Executive shall receive benefits set forth in Section 9(b), except that the Cash Severance Payment shall be equal to the product of two and the sum of the Executive’s Base Salary and Target Bonus, (B) all outstanding equity-related awards held by the Executive shall immediately vest and all options, stock appreciation rights or similar awards shall remain exercisable for the full original term of the award and (C) Section 10 of this Agreement shall apply to the Executive. For the sake of clarity, Section 10 shall not apply unless the Executive’s employment with the Company and its subsidiaries is terminated in a CIC Termination.

(d) Liquidated Damages. The parties acknowledge and agree that damages which will result to the Executive for termination by the Employer of the Executive’s employment without Cause or by the Executive for Good Reason shall be extremely difficult or impossible to establish or prove, and agree that the amounts, excluding the Accrued Benefits, payable to the Executive under Section 9(b) (the “Severance Benefits”) shall constitute liquidated damages for any such termination. The Executive agrees that, except for such other

payments and benefits to which the Executive may be entitled as expressly provided by the terms of this Agreement or any other applicable benefit plan, such liquidated damages shall be in lieu of all other claims that the Executive may make by reason of any such termination of his employment and that, as a condition to receiving the Severance Benefits, the Executive must execute a release of claims substantially in the form attached hereto as Exhibit A (the “Release”), which shall be delivered to the Executive for execution within 5 business days of the Date of Termination. To be eligible for Severance Benefits, the Executive must execute and deliver the Release, and such Release must become irrevocable, within 60 days of the Date of Termination. The Cash Severance Payment shall be made, and the Monthly Payments shall commence, promptly after the Release becomes irrevocable; provided that to the extent required by Code Section 409A, such payments shall be made or commence, as applicable, on the 60th day following the Date of Termination and in the case of the Monthly Payments, shall include all payments that otherwise would have been made before such date.

(e) No Offset. In the event of termination of his employment, the Executive shall be under no obligation to seek other employment and there shall be no offset against amounts due to him on account of any remuneration or benefits provided by any subsequent employment he may obtain. The Employer’s obligation to make any payment pursuant to, and otherwise to perform its obligations under, this Agreement shall not be affected by any offset, counterclaim or other right that the Employer or its affiliates may have against him for any reason.

10. Certain Additional Payments by the Employer. This Section 10 shall apply to the Executive only if the Executive terminates employment with the Company and its subsidiaries in a CIC Termination.

(a) If the Executive’s employment with the Company and its subsidiaries terminates in a CIC Termination and if it is determined that any benefit provided to the Executive or payment or distribution by or for the account of the Employer to or for the benefit of the Executive, whether provided, paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are incurred by the Executive with respect to such excise tax resulting from any action or inaction by the Employer (such excise tax, together with any such interest and penalties, collectively, the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of the Excise Tax and all other income, employment, excise and other taxes that are imposed on the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the sum of (A) the Excise Tax imposed upon the Payments and (B) the product of any deductions disallowed because of the inclusion of the Gross-up Payment in the Executive’s adjusted gross income and the highest applicable marginal rate of federal income taxation for the calendar year in which the Gross-Up Payment is to be made.

(b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by the Employer’s independent, certified public accounting firm or such other certified public accounting firm as may be designated by the Executive and shall be reasonably acceptable to the Employer (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Employer and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Employer. If the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting a change in the ownership or effective control (as defined for purposes of Section 280G of the Code) of the Employer, the Executive shall appoint another nationally recognized accounting firm which is reasonably acceptable to the Employer to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Employer. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Employer to the Executive within five days of the receipt of the Accounting Firm’s determination, but in any event no later than 30 days after the end of the year in which the Executive pays any tax imposed pursuant to Section 4999 of the Code. Any determination by the Accounting Firm shall be binding upon the Employer and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that additional Gross-Up Payments shall be required to be made to compensate the Executive for amounts of Excise Tax later determined to be due, consistent with the calculations required to be made hereunder (an “Underpayment”). If the Employer exhausts its remedies pursuant to Section 10(c) and the Executive is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Employer to or for the benefit of the Executive.

(c) The Executive shall notify the Employer in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Employer of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Employer of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Employer (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Employer notifies the Executive in writing prior to the expiration of such period that they desire to contest such claim, the Executive shall:

(i) give the Employer any information reasonably requested by the Employer relating to such claim;

(ii) take such action in connection with contesting such claim as the Employer shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Employer;

(iii) cooperate with the Employer in good faith effectively to contest such claim; and

(iv) permit the Employer to participate in any proceedings relating to such claim; provided, however, that the Employer shall bear and pay directly all costs and expenses (including additional interest and penalties incurred in connection with such contest) and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.

11. Indemnification. During the Employment Period and thereafter, the Employer agrees to indemnify and hold the Executive and the Executive’s heirs and representatives harmless, to the maximum extent permitted by law, against any and all damages, costs, liabilities, losses and expenses (including reasonable attorneys’ fees) as a result of any claim or proceeding (whether civil, criminal, administrative or investigative), or any threatened claim or proceeding (whether civil, criminal, administrative or investigative), against the Executive that arises out of or relates to the Executive’s service as an officer, director or employee, as the case may be, of the Employer, or the Executive’s service in any such capacity or similar capacity with an affiliate of the Employer or other entity at the request of the Employer, both prior to and after the Effective Date, and to promptly advance to the Executive or the Executive’s heirs or representatives such expenses upon written request with appropriate documentation of such expense upon receipt of an undertaking by the Executive or on the Executive’s behalf to repay such amount if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Employer. During the Employment Period and thereafter, the Employer also shall provide the Executive with coverage under its current directors’ and officers’ liability policy to the same extent that it provides such coverage to its other executive officers. If the Executive has any knowledge of any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative, as to which the Executive may request indemnity under this provision, the Executive will give the Employer prompt written notice thereof; provided that the failure to give such notice shall not affect the Executive’s right to indemnification. The Employer shall be entitled to assume the defense of any such proceeding and the Executive will use reasonable efforts to cooperate with such defense. To the extent that the Executive in good faith determines that there is an actual or potential conflict of interest between the Employer and the Executive in connection with the defense of a proceeding, the Executive shall so notify the Employer and shall be entitled to separate representation at the Employer’s expense by counsel selected by the Executive (provided that the Employer may reasonably object to the selection of counsel within ten (10) business days after notification thereof) which counsel shall cooperate, and coordinate the defense, with the Employer’s counsel and minimize the expense of such separate representation to the extent consistent with the Executive’s separate defense. This Section 11 shall continue in effect after the termination of the Executive’s employment or the termination of this Agreement.

12. Attorney’s Fees. The Employer shall advance the Executive (and his beneficiaries) any and all costs and expenses (including without limitation attorneys’ fees and other charges of counsel) incurred by the Executive (or any of his beneficiaries) in resolving any controversy, dispute or claim arising out of or relating to this Agreement, any other agreement or arrangement between the Executive and the Employer, the Executive’s employment with the Employer, or the termination thereof; provided that the Executive shall reimburse the Employer any advances on a net after-tax basis to cover expenses incurred by the Executive for claims (a) brought by the Employer on account of the Executive’s alleged breach of Section 7 of this Agreement, breach of the Executive’s fiduciary duty of loyalty, or fraud or material misconduct, if it is judicially determined that the Employer is the prevailing party, or (b) brought by the Executive that are judicially determined to be frivolous or advanced in bad faith. Pending the resolution of any such claim, the Executive (and his beneficiaries) shall continue to receive all payments and benefits described in Section 5 of this Agreement. This Section 12 shall continue in effect after the termination of the Executive’s employment or the termination of this Agreement.

13. Notices. All notices, demands, requests, or other communications which may be or are required to be given or made by any party to any other party pursuant to this Agreement shall be in writing and shall be hand delivered, mailed by first-class registered or certified mail, return receipt requested, postage prepaid, delivered by overnight air courier, or transmitted by facsimile transmission addressed as follows:

(i) If to the Employer:

Sagent Pharmaceuticals, Inc.

1901 N. Roselle Road

Suite 700

Schaumburg, IL 60195

Attn: Chief Executive Officer

(ii) If to the Executive:

James M. Hussey

Address last shown on the Employer’s Records

Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request, or communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, confirmation of facsimile transmission or the affidavit of messenger being deemed conclusive but not exclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

14. Severability. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.

15. Effect on Other Agreements. The provisions of this Agreement shall supersede the terms of any plan, policy, agreement, award or other arrangement of the Employer (whether entered into before or after the Effective Date) to the extent application of the terms of this Agreement is more favorable to the Executive.

16. Survival. It is the express intention and agreement of the parties hereto that the provisions of Sections 7, 9, 10, 11, 12, 13, 16, 17, 18, 20, 21, 23 and 24 hereof and this Section 16 shall survive the termination of employment of the Executive. In addition, all obligations of the Employer to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.

17. Assignment. The rights and obligations of the parties to this Agreement shall not be assignable or delegable, except that (i) in the event of the Executive’s death, the personal representative or legatees or distributees of the Executive’s estate, as the case may be, shall have the right to receive any amount owing and unpaid to the Executive hereunder and (ii) the rights and obligations of the Employer hereunder shall be assignable and delegable in connection with any subsequent merger, consolidation, sale of all or substantially all of the assets or equity interests of the Employer or similar transaction involving the Employer or a successor corporation. The Employer shall require any successor to the Employer to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Employer would be required to perform it if no such succession had taken place.

18. Binding Effect. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.

19. Amendment; Waiver. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the party against whom enforcement is sought. Neither the waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.

20. Headings. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

21. Governing Law. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Illinois (but not including any choice of law rule thereof that would cause the laws of another jurisdiction to apply).

22. Entire Agreement. This Agreement constitutes the entire agreement between the parties respecting the employment of the Executive, there being no representations, warranties or commitments except as set forth herein.

23. Counterparts. This Agreement may be executed in two counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.

24. Withholding. The Employer may withhold from any benefit payment under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling; provided that any withholding obligation arising in connection with the exercise of a stock option or the transfer of stock or other property shall be satisfied through withholding an appropriate number of shares of stock or appropriate amount of such other property.

25. Section 409A. The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If the Executive notifies the Employer (with specificity as to the reason therefor) that the Executive believes that any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Code Section 409A and the Employer concurs with such belief or the Employer (without any obligation whatsoever to do so) independently makes such determination, the Employer shall, after consulting with the Executive, reform such provision to attempt to comply with Code Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code Section 409A. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Employer of the applicable provision without violating the provisions of Code Section 409A. In no event whatsoever shall the Employer be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A. With respect to any payment or benefit considered to be nonqualified deferred compensation under Section 409A, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation

from service.” Notwithstanding anything to the contrary in this Agreement, if the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered nonqualified deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death, to the extent required under Code Section 409A. Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 25 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (B) any right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year. For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Employer. Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

26. Definitions.

“Accrued Benefits” means (i) Base Salary through the Date of Termination; (ii) accrued and unused vacation pay; (iii) any earned but unpaid Annual Bonus; (iv) any amounts owing to the Executive for reimbursement of expenses properly incurred by the Executive prior to the Date of Termination and which are reimbursable in accordance with Section 6; and (v) any other benefits or amounts due and owing to the Executive under the terms of any plan, program or arrangement of the Employer. Amounts payable pursuant to the clauses (i) - (iii) shall be paid promptly after the Date of Termination and all other amounts will be paid in accordance with the terms of the applicable plan, program or arrangement (as modified by this Agreement).

“Board” means the Board of Directors of the Company.

“Cause” shall be limited to the following events (i) the Executive’s conviction of, or plea of nolo contendere to, a felony (other than in connection with a traffic violation) under any state or federal law; (ii) the Executive’s willful and continued failure to substantially perform

his essential job functions hereunder after receipt of written notice from the Employer that specifically identifies the manner in which the Executive has substantially failed to perform his essential job functions and specifying the manner in which the Executive may substantially perform his essential job functions in the future; (iii) a material act of fraud or willful and material misconduct with respect, in each case, to the Employer, by the Executive; (iv) a willful and material breach of Section 7; or (v) a willful and material violation of a material policy of the Company. For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Employer. Anything herein to the contrary notwithstanding, the Executive shall not be terminated for “Cause” hereunder unless (A) written notice stating the basis for the termination is provided to the Executive, (B) as to clauses (ii), (iii), (iv) or (v) of this paragraph, the Executive is given 30 days to cure the neglect or conduct that is the basis of such claim (it being understood that any errors in expense reimbursement may be cured by repayment), (C) if the Executive fails to cure such neglect or conduct, the Executive has an opportunity to be heard with counsel before the full Board prior to any vote regarding the existence of Cause and (D) there is a vote of a majority of the members of the Board to terminate the Executive for Cause.

“Change in Control” means the occurrence of one or more of the following events: (i) any “person” (as such terms is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934 as amended (the “Act”)) or “group” (as such term is used in Section 14(d)(d) of the Act) is or becomes a “beneficial owner” (as such term is used in Rule 13d-3 promulgated under the Act) of more than 30% of the Voting Stock of the Employer (excluding acquisitions pursuant to a Business Combination (as defined below) that is not considered to be a Change in Control under clause (v) below; (ii) the majority of the Board consists of individuals other than Incumbent Directors, which term means the members of the Board on the Effective Date; provided that any person becoming a director subsequent to such date whose election or nomination for election was supported by two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director (excluding any person who received such support in connection with the settlement of a proxy contest); (iii) the Employer adopts any plan of liquidation providing for the distribution of all or substantially all of its assets; (iv) the Employer transfers all or substantially all of its assets or business (unless the shareholders of the Employer immediately prior to such transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned the Voting Stock of the Employer, all of the Voting Stock or other ownership interests of the entity or entities, if any, that succeed to the business of the Employer); or (v) any merger, reorganization, consolidation or similar transaction (a “Business Combination”) unless, immediately after consummation of such Business Combination, (A) the shareholders of the Employer immediately prior to the Business Combination hold, directly or indirectly, more than 50% of the Voting Stock of the Employer or the Employer’s ultimate parent company if the Employer is a subsidiary of another corporation, and (B) no person or group beneficially owns more than 30% of the Voting Stock of the Employer or the ultimate parent company of the Employer if the Employer is a subsidiary of partner corporation. For purposes of this Change in Control definition, the “Employer” shall include any entity that succeeds to all or substantially all of the business of the Employer and “Voting Stock” shall mean securities of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of a corporation.

“Company Affiliate” means any entity controlled by, in control of, or under common control with, the Employer.

“Company Confidential Information” means information known to the Executive to constitute trade secrets or proprietary information belonging to the Employer or other confidential financial information, operating budgets, strategic plans or research methods, personnel data, projects or plans, or non-public information regarding the terms of any existing or pending lending transaction between Employer and an existing or pending client or customer (as the phrase “client or customer” is defined in Section 7(d)(i) hereof), in each case, received by the Executive in the course of his employment by the Employer or in connection with his duties with the Employer. Notwithstanding anything to the contrary contained herein, the general skills, knowledge and experience gained during the Executive’s employment with the Employer, information publicly available or generally known within the industry or trade in which the Employer competes and information or knowledge possessed by the Executive prior to his employment by the Employer, shall not be considered Company Confidential Information.

“Date of Termination” means (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated because of the Executive’s Disability, 30 days after Notice of Termination, provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during such 30-day period; or (iii) if the Executive’s employment is terminated by the Employer pursuant to Section 8(a)(ii)(B) or by the Executive pursuant to Section 8(a)(iii), the date specified in the Notice of Termination.

“Good Reason” means, unless otherwise agreed to in writing by the Executive, (i) any diminution or adverse change in the Executive’s titles; (ii) reduction in the Executive’s Base Salary or Target Bonus; ( iii) a change adverse to the Executive in the Executive’s reporting obligations; (iv) a material diminution in the Executive’s authority, responsibilities or duties or material interference with the Executive’s carrying out his duties; (v) the assignment of duties inconsistent with the Executive’s position or status with the Employer as of the date hereof; (vi) a relocation by the Company of the Executive’s primary place of employment specified in Section 4 to a location more than 25 miles further from the Executive’s primary residence than the current location of the Executive’s primary place of employment; (vii) any other material breach of the terms of this Agreement or any other agreement that breach is not cured within ten days after the Executive’s delivery of a written notice of such breach to the Employer; (viii) any purported termination of the Executive’s employment by the Employer that is not effected in accordance with the applicable provisions of this Agreement; (ix) the failure of the Employer to obtain the assumption in writing of its obligations under this Agreement by any successor to all or substantially all of the assets of the Employer within 15 days after a merger, consolidation, sale or similar transaction; or (x) the delivery of a notice of Non-Renewal by the Employer. In order to invoke a termination for Good Reason, the Executive must terminate his employment, if at all, within 60 days of the occurrence of any event of “Good Reason”.

“Non-Compete Period” means the period commencing on the Effective Date and ending twelve months after the earlier of the expiration of the Employment Period or the Executive’s Date of Termination.

IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Agreement, or have caused this Agreement to be duly executed and delivered on their behalf.

SAGENT PHARMACEUTICALS, INC.
By:	/s/ John Matthei
Name: John Matthei Title: Vice President, Human Resources EXECUTIVE
/s/ James M. Hussey James M. Hussey

EX-10.2

Exhibit 10.2

March 12, 2013

James Hussey

15 Mulberry Drive

Hawthorn Woods, IL 60047

Dear James:

We are pleased to offer you a position with Sagent Pharmaceuticals, Inc., as President reporting to our Chief Executive Officer (CEO). If you decide to join us, you will receive an annual salary of $420,000, which will be paid bi-weekly in accordance with Sagent’s normal payroll procedures. You will be eligible for a 50% target annual bonus. This bonus will be subject to approval by the Board of Directors and will be determined based on Company financial results, and the Company and you achieving quantitative performance goals. Any bonus may be paid in the first quarter of the following year and will be pro-rated for the first year of employment.

You will also be eligible to participate in Sagent’s health insurance plan, dental plan, vision plan, life insurance, disability, long term care and 401K plan on the 1^st of the month following your start date. You will be entitled to 24 days of paid time off (PTO) in accordance with Company policy, which combines vacation, sick and personal days plus the Company’s annual holidays. You should note that the Company may modify job titles, salaries and benefits from time to time as it deems necessary.

In addition, if you decide to join Sagent, it will be recommended at the first meeting of Sagent’s Board of Directors following your start date that the Company grant you an option to purchase 100,000 shares of the Company’s Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date prior to the date of grant, as determined by the Board of Directors. 25% of the shares subject to the option shall vest 12 months after your hire date subject to your continuing employment with the Company, and no shares shall vest before such date. The remaining shares shall vest at 25% on each subsequent anniversary. This option grant shall be subject to the terms and conditions of Sagent’s 2011 Incentive Compensation Plan and Stock Option Agreement, including vesting requirements. No right to any stock is earned or accrued until such time that vesting occurs, nor does the grant confer any right to continue vesting or employment.

Sagent is excited about your joining and looks forward to a beneficial and productive relationship. Nevertheless, you should be aware that your employment with the Sagent is for no specified period and constitutes at-will employment. As a result, you are free to resign at any time, for any reason or for no reason. Similarly, Sagent is free to conclude your employment relationship with the Company at any time, with or without cause, and with or without notice. We request that, in the event of resignation, you give Sagent at least two weeks notice.

We also ask that, if you have not already done so, you disclose any and all agreements relating to your prior employment that may affect your eligibility to be employed by Sagent or limit the manner in which you may be employed. It is Sagent’s understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Moreover, you agree that, during the term of your employment with Sagent, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which Sagent is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to Sagent. Similarly, you agree not to bring any third party confidential information to Sagent, including that of any former employer, and not to utilize any such information in performing your duties for Sagent.

As a Sagent employee, you will be expected to abide by Sagent’s rules and standards. Specifically, you will be required to sign an acknowledgment that you have read and that you understand Sagent’s Code of Conduct and Employee Handbook.

As a condition of your employment, you are also required to sign and comply with the enclosed Confidential Information, Invention Assignment and Arbitration Agreement which requires, among other provisions, the assignment of patent rights to any invention made during your employment at Sagent, and non-disclosure of Sagent proprietary information.

Sagent has an office at 1901 N. Roselle Road, Suite 700 in Schaumburg, IL 60195 and it is expected that this would be your primary place of employment.

To accept this offer, please sign and date this letter in the space provided below. A duplicate original is enclosed for your records. If you accept our offer, your first day of employment will be on March 18, 2013 or on a mutually agreed upon date pending the completion of a positive background check and clear drug screen. This letter and the Confidentiality Agreement set forth the terms of your employment with Sagent and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral. This letter, including but not limited to its at-will employment provision, may not be modified or amended except by a written agreement signed by Sagent and you. This offer of employment will terminate if it is not accepted, signed and returned by March 15, 2013.

James Hussey Offer Letter Page 2 of 3

We look forward to your favorable reply and to working with you at Sagent Pharmaceuticals, Inc.

Sincerely,

/s/ John Matthei

John Matthei

Vice President, Human Resources

Agreed to and accepted:

Signature: /s/ James M. Hussey                                                     

Printed Name: James M. Hussey                                                   

Date: March 13, 2013                                                                    

Enclosures:

Duplicate Original Letter

Confidential Information, Invention Assignment and Arbitration Agreement

Benefit and Human Resources information

James Hussey Offer Letter Page 3 of 3

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, 2013

/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, 2013

/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, 2013, 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, 2013

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, 2013, 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, 2013

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

Changes in Investment of Sagent Agila (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule of Equity Method Investments [Line Items]
Investment at beginning of year	$ 19,622
Equity in net income	443	456
Investment at end of year	18,295
Sagent Agila LLC
Schedule of Equity Method Investments [Line Items]
Investment at beginning of year	2,161
Equity in net income	541
Dividend paid	(926)
Investment at end of year	$ 1,776

XML

Schedule of Net Amount of Risk by Product and Guarantee (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Product Information [Line Items]
Net revenue by Product Line	$ 60,211	$ 38,280
Anti-infective
Product Information [Line Items]
Net revenue by Product Line	22,179	17,247
Critical care
Product Information [Line Items]
Net revenue by Product Line	19,088	17,511
Oncology
Product Information [Line Items]
Net revenue by Product Line	$ 18,944	$ 3,522

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, 2013	Mar. 31, 2012
Basic and dilutive numerator:
Net income (loss)	$ 9,838	$ (8,289)
Denominator:
Weighted-average common shares outstanding - basic (in thousands)	28,135	27,915
Net effect of dilutive securities:
Stock options and restricted stock	611
Weighted-average common shares outstanding - diluted (in thousands)	28,746	27,915
Net income (loss) per common share (basic)	$ 0.35	$ (0.30)
Net income (loss) per common share (diluted)	$ 0.34	$ (0.30)

XML

Cost and Estimated Current Fair Value of Fixed-Income Securities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less, cost basis	$ 25,498
Due between one and five years, cost basis	17,410
Total fixed income securities, cost basis	42,908
Due in one year or less, Estimated fair value	25,488
Due between one and five years, Estimated fair value	17,373
Total fixed income securities, Estimated fair value	$ 42,861

XML

Investment (Tables)

3 Months Ended

Mar. 31, 2013

Sagent Agila LLC

Changes in Investment

Changes in our investment in Sagent Agila during the three months ended March 31, 2013 were as follows:

Investment in Sagent Agila at January 1, 2013	$	2,161
Equity in net income of Sagent Agila		541
Dividend paid		(926	)
Investment in Sagent Agila at March 31, 2013	$	1,776

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	2013		2012
Net revenues	$	5,629	$	5,690
Gross profit		1,444		1,446
Net income		1,083		1,256

KSCP

Changes in Investment

Changes in our investment in KSCP during the three months ended March 31, 2013 were as follows:

Investment in KSCP at January 1, 2013	$	17,461
Equity in net loss of KSCP		(984	)
Currency translation adjustment		31
Investments in KSCP		11
Investment in KSCP at March 31, 2013	$	16,519

Condensed Statement of Operations Information

Condensed statement of operations information of KSCP is presented below.

	Three months ended March 31,
Condensed statement of operations information	2013			2012
Net revenues	$	—		$	—
Gross profit		—			—
Net loss		(1,799	)		(1,459	)

XML

Actavis Contract Termination - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Agreement termination date	2014-12-31
Consideration for termination of agreement	$ 5,000

XML

Accrued Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Accrued Liabilities [Line Items]
Payroll and employee benefits	$ 2,460	$ 1,211
Sales and marketing	5,501	5,649
Other accrued liabilities	455	509
Accrued Liabilities, Total	$ 8,416	$ 7,369

XML

Intangible Assets Net - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2013 Right
Finite-Lived Intangible Assets [Line Items]
Number of products	18
Product Licensing Rights
Finite-Lived Intangible Assets [Line Items]
Weighted-average period prior to next extension or renewal of intangible asset	62 months

XML

Stock- Based Compensation - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted	370,024	192,850
Stock options exercised	25,043	19,391
Stock options aggregate intrinsic value	$ 236	$ 344
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	12,156	13,608
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock granted	41,702	34,050

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Inventories

3 Months Ended

Mar. 31, 2013

Inventories

Note 3. Inventories:

Inventories at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013								December 31, 2012
	Approved			Pending regulatory approval		Inventory			Approved			Pending regulatory approval		Inventory
Finished goods	$	48,809		$	1,641	$	50,450		$	46,410		$	1,437	$	47,847
Raw materials		2,354			—		2,354			1,280			—		1,280
Inventory reserve		(3,031	)		—		(3,031	)		(2,021	)		—		(2,021	)
	$	48,132		$	1,641	$	49,773		$	45,669		$	1,437	$	47,106

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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, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 54,477	$ 54,746
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,616	18,141
Corporate Bonds and Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	31,765	13,358
Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,096	23,247
Short-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	42,861	36,605
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	11,616	18,141
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	11,616	18,141
Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	42,861	36,605
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	31,765	13,358
Significant other observable inputs (Level 2) | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	11,096	23,247
Significant other observable inputs (Level 2) | Short-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 42,861	$ 36,605

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Earnings per share (Tables)

3 Months Ended

Mar. 31, 2013

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, 2013 and 2012:

	Three months ended March 31,
	2013		2012
Basic and dilutive numerator:
Net income (loss), as reported	$	9,838	$	(8,289	)
Denominator:
Weighted-average common shares outstanding - basic (in thousands)		28,135		27,915
Net effect of dilutive securities:
Stock options and restricted stock		611		—
Weighted-average common shares outstanding - diluted (in thousands)		28,746		27,915
Net income (loss) per common share (basic)	$	0.35	$	(0.30	)
Net income (loss) per common share (diluted)	$	0.34	$	(0.30	)

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Accumulated other comprehensive income (Tables)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income

Accumulated other comprehensive income at March 31, 2013 and December 31, 2012 is comprised of the following:

	March 31, 2013			December 31, 2012
Currency translation adjustment, net of tax	$	2,519		$	2,488
Unrealized (losses) gains on available for sale securities, net of tax		(47	)		12
Total accumulated other comprehensive income	$	2,472		$	2,500

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Accumulated Other Comprehensive Income (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Accumulated Other Comprehensive Income [Line Items]
Currency translation adjustment, net of tax	$ 2,519	$ 2,488
Unrealized (losses) gains on available for sale securities, net of tax	(47)	12
Total accumulated other comprehensive income	$ 2,472	$ 2,500

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Net revenue by product (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Net Revenue by Product Category

Net revenue by product line is as follows:

	Three months ended March 31,
	2013		2012
Therapeutic class:
Anti-infective	$	22,179	$	17,247
Critical care		19,088		17,511
Oncology		18,944		3,522
	$	60,211	$	38,280

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Investments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Cost basis	$ 71,026
Unrealized gains	3
Unrealized losses	(50)
Recorded basis	70,979
Cash and cash equivalents	28,118	27,687	22,281	52,203
Short-term investments	42,861	36,605
Cash
Schedule of Available-for-sale Securities [Line Items]
Cost basis	16,502
Recorded basis	16,502
Cash and cash equivalents	16,502
Money Market Funds
Schedule of Available-for-sale Securities [Line Items]
Cost basis	11,616
Recorded basis	11,616
Cash and cash equivalents	11,616
Commercial Paper
Schedule of Available-for-sale Securities [Line Items]
Cost basis	11,099
Unrealized losses	(3)
Recorded basis	11,096
Short-term investments	11,096
Corporate Bonds and Notes
Schedule of Available-for-sale Securities [Line Items]
Cost basis	31,809
Unrealized gains	3
Unrealized losses	(47)
Recorded basis	31,765
Short-term investments	$ 31,765

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Investments

3 Months Ended

Mar. 31, 2013

Investments

Note 2. Investments:

Our investments at March 31, 2013 were comprised of the following:

	Cost basis		Unrealized gains		Unrealized losses			Recorded basis		Cash and cash equivalents		Short term investments
Assets
Cash	$	16,502	$	—	$	—		$	16,502	$	16,502	$	—
Money market funds		11,616		—		—			11,616		11,616		—
Commercial paper		11,099		—		(3	)		11,096		—		11,096
Corporate bonds and notes		31,809		3		(47	)		31,765		—		31,765
	$	71,026	$	3	$	(50	)	$	70,979	$	28,118	$	42,861

Investments with continuous unrealized losses for less than twelve months and their related fair values were as follows:

	Fair value		Unrealized losses
Commercial paper	$	11,096	$	(3	)
Corporate bonds and notes		23,868		(47	)
	$	34,964	$	(50	)

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, 2013.

The original cost and estimated current fair value of our fixed-income securities are set forth below.

	Cost basis		Estimated fair value
Due in one year or less	$	25,498	$	25,488
Due between one and five years		17,410		17,373
	$	42,908	$	42,861

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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, 2013
Schedule of Available-for-sale Securities [Line Items]
Fair value	$ 34,964
Unrealized losses	(50)
Commercial Paper
Schedule of Available-for-sale Securities [Line Items]
Fair value	11,096
Unrealized losses	(3)
Corporate Bonds and Notes
Schedule of Available-for-sale Securities [Line Items]
Fair value	23,868
Unrealized losses	$ (47)

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Condensed Statement of Operations Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Sagent Agila LLC
Schedule of Equity Method Investments [Line Items]
Net revenues	$ 5,629	$ 5,690
Gross profit	1,444	1,446
Net income (loss)	1,083	1,256
KSCP
Schedule of Equity Method Investments [Line Items]
Net income (loss)	$ (1,799)	$ (1,459)

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Current assets:
Cash and cash equivalents	$ 28,118	$ 27,687
Short-term investments	42,861	36,605
Accounts receivable, net of chargebacks and other deductions	35,842	31,609
Inventories, net	49,773	47,106
Due from related party	4,695	1,440
Prepaid expenses and other current assets	3,105	2,821
Total current assets	164,394	147,268
Property, plant, and equipment, net	808	780
Investment in joint ventures	18,295	19,622
Intangible assets, net	2,971	4,277
Other assets	347	368
Total assets	186,815	172,315
Current liabilities:
Accounts payable	22,397	21,813
Due to related party	5,566	7,026
Accrued profit sharing	6,504	4,246
Accrued liabilities	8,416	7,369
Total current liabilities	42,883	40,454
Long term liabilities:
Other long-term liabilities	6	6
Total liabilities	42,889	40,460
Stockholders' equity:
Common stock-$0.01 par value, 100,000,000 authorized and 28,141,532 and 28,116,489 outstanding at March 31, 2013 and December 31, 2012, respectively	281	281
Additional paid-in capital	274,986	272,725
Accumulated other comprehensive income	2,472	2,500
Accumulated deficit	(133,813)	(143,651)
Total stockholders' equity	143,926	131,855
Total liabilities and stockholders' equity	$ 186,815	$ 172,315

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Earnings Per Share - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive share excluded from the calculation of diluted earnings	735,843	2,451,290

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities
Net income (loss)	$ 9,838	$ (8,289)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	1,274	1,633
Stock-based compensation	2,077	1,285
Equity in net (income) loss of joint ventures	443	456
Dividends from unconsolidated joint ventures	926
Changes in operating assets and liabilities:
Accounts receivable, net	(4,233)	4,918
Inventories	(2,667)	(711)
Prepaid expenses and other current assets	(247)	(1,690)
Due from related party	(3,292)	483
Accounts payable and other accrued liabilities	2,780	(21,217)
Net cash provided by (used in) operating activities	6,899	(23,132)
Cash flows from investing activities
Capital expenditures	(92)	(7)
Return of principal balance of restricted cash		23
Investments in unconsolidated joint ventures	(11)	(51)
Return of capital from unconsolidated joint venture		228
Purchases of investments	(99,648)	(67,401)
Sale of investments	93,200	99,602
Purchase of product rights	(100)	(1,360)
Net cash (used in) provided by investing activities	(6,651)	31,034
Cash flows from financing activities
Reduction in short-term notes payable		(24,867)
Repayment of long-term debt		(12,273)
Proceeds from issuance of common stock, net of issuance costs	183	90
Payment of deferred financing costs		(774)
Net cash provided by (used in) financing activities	183	(37,824)
Net increase (decrease) in cash and cash equivalents	431	(29,922)
Cash and cash equivalents, at beginning of period	27,687	52,203
Cash and cash equivalents, at end of period	$ 28,118	$ 22,281

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Schedule of Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 4,638	$ 5,818
Accumulated amortization	(1,667)	(1,541)
Intangible assets, net	2,971	4,277
Product Licensing Rights
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	3,256	3,156
Accumulated amortization	(1,667)	(1,541)
Intangible assets, net	1,589	1,615
Product Development Rights
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	1,382	2,662
Intangible assets, net	$ 1,382	$ 2,662

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Investments (Tables)

3 Months Ended

Mar. 31, 2013

Investments

Our investments at March 31, 2013 were comprised of the following:

	Cost basis		Unrealized gains		Unrealized losses			Recorded basis		Cash and cash equivalents		Short term investments
Assets
Cash	$	16,502	$	—	$	—		$	16,502	$	16,502	$	—
Money market funds		11,616		—		—			11,616		11,616		—
Commercial paper		11,099		—		(3	)		11,096		—		11,096
Corporate bonds and notes		31,809		3		(47	)		31,765		—		31,765
	$	71,026	$	3	$	(50	)	$	70,979	$	28,118	$	42,861

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 were as follows:

	Fair value		Unrealized losses
Commercial paper	$	11,096	$	(3	)
Corporate bonds and notes		23,868		(47	)
	$	34,964	$	(50	)

Cost and Estimated Current Fair Value of Fixed-Income Securities

The original cost and estimated current fair value of our fixed-income securities are set forth below.

	Cost basis		Estimated fair value
Due in one year or less	$	25,498	$	25,488
Due between one and five years		17,410		17,373
	$	42,908	$	42,861

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Movements in Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Product Licensing Rights	Mar. 31, 2013 Product Development Rights
Finite-Lived Intangible Assets [Line Items]
Beginning Balance	$ 2,971	$ 4,277	$ 1,615	$ 2,662
Purchase of product rights			100
Amortization of product rights			(126)	(1,280)
Ending Balance	$ 2,971	$ 4,277	$ 1,589	$ 1,382

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Intangible assets, net (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Intangible Assets

Intangible assets at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013							December 31, 2012
	Gross  carrying amount		Accumulated amortization			Intangible assets, net		Gross  carrying amount		Accumulated amortization			Intangible assets, net
Product licensing rights	$	3,256	$	(1,667	)	$	1,589	$	3,156	$	(1,541	)	$	1,615
Product development rights		1,382		—			1,382		2,662		—			2,662
	$	4,638	$	(1,667	)	$	2,971	$	5,818	$	(1,541	)	$	4,277

Movements in Intangible Assets

Movements in intangible assets were due to the following:

	Product licensing rights			Product development rights
December 31, 2012	$	1,615		$	2,662
Purchase of product rights		100			—
Amortization of product rights		(126	)		(1,280	)
March 31, 2013	$	1,589		$	1,382

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:

	Amortization expense
For the year ending:
March 31, 2014	$	1,793
March 31, 2015		340
March 31, 2016		158
March 31, 2017		120
March 31, 2018		110

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Basis of presentation

3 Months Ended

Mar. 31, 2013

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 investments in Kanghong Sagent (Chengdu) Pharmaceutical Corporation Limited (“KSCP”) and in Sagent Agila LLC using the equity method of accounting, as our interest in each entity provides for joint financial and operational control. Operating results of our KSCP equity method investment are reported on a one-month lag.

You should read these statements in conjunction with our consolidated financial statements and related notes for the year ended December 31, 2012, included in our most recent Annual Report on Form 10-K filed with the SEC on March 18, 2013.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Common stock, par value	$ 0.01	$ 0.01
Common stock, authorized shares	100,000,000	100,000,000
Common stock, outstanding shares	28,141,532	28,116,489

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Net revenue by product

3 Months Ended

Mar. 31, 2013

Net revenue by product

Note 12. Net revenue by product:

Net revenue by product line is as follows:

	Three months ended March 31,
	2013		2012
Therapeutic class:
Anti-infective	$	22,179	$	17,247
Critical care		19,088		17,511
Oncology		18,944		3,522
	$	60,211	$	38,280

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 30, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
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		28,141,532

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Related party transactions

3 Months Ended

Mar. 31, 2013

Related party transactions

Note 13. Related party transactions:

As of March 31, 2013 and December 31, 2012, respectively, we had a receivable of $2,540 and $1,404 from Sagent Agila LLC, which is expected to offset future profit-sharing payments. As of March 31, 2013 and December 31, 2012, respectively, we had a payable of $5,566 and $7,026 to Sagent Agila LLC, principally for the acquisition of inventory and amounts due under profit-sharing arrangements. During the three months ended March 31, 2013, Sagent Agila LLC distributed $1,852 of profit sharing receipts to its joint venture partners.

In March 2013, we committed to funding cash shortfalls of our KSCP joint venture through September 30, 2013 while discussions occur between the two joint venture partners on the long-term strategic direction of the facility. As of March 31, 2013, we had a receivable of $2,190 from KSCP for the acquisition of certain raw material inventory on behalf of KSCP and a prepayment of certain finished goods inventory.

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net revenue	$ 60,211	$ 38,280
Cost of sales	41,753	32,518
Gross profit	18,458	5,762
Operating expenses:
Product development	4,261	4,631
Selling, general and administrative	8,867	7,627
Equity in net (income) loss of joint ventures	443	456
Total operating expenses	13,571	12,714
Termination fee	5,000
Income (loss) from operations	9,887	(6,952)
Interest income and other	16	78
Interest expense	(65)	(1,415)
Income (loss) before income taxes	9,838	(8,289)
Provision for income taxes
Net income (loss)	$ 9,838	$ (8,289)
Net income (loss) per common share:
Basic	$ 0.35	$ (0.30)
Diluted	$ 0.34	$ (0.30)
Weighted-average of shares used to compute net income (loss) per common share:
Basic	28,135	27,915
Diluted	28,746	27,915

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Accrued liabilities

3 Months Ended

Mar. 31, 2013

Accrued liabilities

Note 7. Accrued liabilities:

Accrued liabilities at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013		December 31, 2012
Payroll and employee benefits	$	2,460	$	1,211
Sales and marketing		5,501		5,649
Other accrued liabilities		455		509
	$	8,416	$	7,369

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Investment

3 Months Ended

Mar. 31, 2013

Sagent Agila LLC

Investment

Note 5. Investment in Sagent Agila:

Changes in our investment in Sagent Agila during the three months ended March 31, 2013 were as follows:

Investment in Sagent Agila at January 1, 2013	$	2,161
Equity in net income of Sagent Agila		541
Dividend paid		(926	)
Investment in Sagent Agila at March 31, 2013	$	1,776

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

	Three months ended March 31,
Condensed statement of operations information	2013		2012
Net revenues	$	5,629	$	5,690
Gross profit		1,444		1,446
Net income		1,083		1,256

KSCP

Investment

Note 6. Investment in KSCP:

Changes in our investment in KSCP during the three months ended March 31, 2013 were as follows:

Investment in KSCP at January 1, 2013	$	17,461
Equity in net loss of KSCP		(984	)
Currency translation adjustment		31
Investments in KSCP		11
Investment in KSCP at March 31, 2013	$	16,519

Condensed statement of operations information of KSCP is presented below.

	Three months ended March 31,
Condensed statement of operations information	2013			2012
Net revenues	$	—		$	—
Gross profit		—			—
Net loss		(1,799	)		(1,459	)

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Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Inventory Valuation

Inventories at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013								December 31, 2012
	Approved			Pending regulatory approval		Inventory			Approved			Pending regulatory approval		Inventory
Finished goods	$	48,809		$	1,641	$	50,450		$	46,410		$	1,437	$	47,847
Raw materials		2,354			—		2,354			1,280			—		1,280
Inventory reserve		(3,031	)		—		(3,031	)		(2,021	)		—		(2,021	)
	$	48,132		$	1,641	$	49,773		$	45,669		$	1,437	$	47,106

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Actavis contract termination

3 Months Ended

Mar. 31, 2013

Actavis contract termination

Note 14. 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 will receive 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. These proceeds are included in Termination fee in our Condensed Consolidated Statement of Operations for the three months ended March 31, 2013.

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Earnings per share

3 Months Ended

Mar. 31, 2013

Earnings per share

Note 10. Earnings per share:

Basic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Because of their anti-dilutive effect, 735,843 and 2,451,290 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, 2013 and 2012, respectively.

The table below presents the computation of basic and diluted earnings per share for the three months ended March 31, 2013 and 2012:

	Three months ended March 31,
	2013		2012
Basic and dilutive numerator:
Net income (loss), as reported	$	9,838	$	(8,289	)
Denominator:
Weighted-average common shares outstanding - basic (in thousands)		28,135		27,915
Net effect of dilutive securities:
Stock options and restricted stock		611		—
Weighted-average common shares outstanding - diluted (in thousands)		28,746		27,915
Net income (loss) per common share (basic)	$	0.35	$	(0.30	)
Net income (loss) per common share (diluted)	$	0.34	$	(0.30	)

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Fair value measurements

3 Months Ended

Mar. 31, 2013

Fair value measurements

Note 8. Fair value measurements:

Assets measured at fair value on a recurring basis as of March 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	$	11,616	$	11,616	$	—	$	—
Corporate bonds and notes		31,765		—		31,765		—
Commercial paper		11,096		—		11,096		—
Short-term investments	$	42,861	$	—	$	42,861	$	—
Total assets	$	54,477	$	11,616	$	42,861	$	—

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.

Assets measured at fair value on a recurring basis as of December 31, 2012 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	$	18,141	$	18,141	$	—	$	—
Corporate bonds and notes		13,358		—		13,358		—
Commercial paper		23,247		—		23,247		—
Short-term investments	$	36,605	$	—	$	36,605	$	—
Total assets	$	54,746	$	18,141	$	36,605	$	—

There were no transfers of assets between Level 1 and Level 2 during the periods presented.

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Accumulated other comprehensive income

3 Months Ended

Mar. 31, 2013

Accumulated other comprehensive income

Note 9. Accumulated other comprehensive income:

Accumulated other comprehensive income at March 31, 2013 and December 31, 2012 is comprised of the following:

	March 31, 2013			December 31, 2012
Currency translation adjustment, net of tax	$	2,519		$	2,488
Unrealized (losses) gains on available for sale securities, net of tax		(47	)		12
Total accumulated other comprehensive income	$	2,472		$	2,500

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Stock-based compensation

3 Months Ended

Mar. 31, 2013

Stock-based compensation

Note 11. Stock-based compensation:

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. We granted 192,850 stock options, 13,608 restricted stock units and 34,050 restricted stock awards during the three months ended March 31, 2012. There were 25,043 and 19,391 stock options exercised during the three months ended March 31, 2013 and 2012, respectively, with an aggregate intrinsic value of $236 and $344, respectively.

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Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule of Inventory [Line Items]
Finished goods	$ 50,450	$ 47,847
Raw materials	2,354	1,280
Inventory reserve	(3,031)	(2,021)
Inventory, Net, Total	49,773	47,106
Approved
Schedule of Inventory [Line Items]
Finished goods	48,809	46,410
Raw materials	2,354	1,280
Inventory reserve	(3,031)	(2,021)
Inventory, Net, Total	48,132	45,669
Pending Regulatory Approval
Schedule of Inventory [Line Items]
Finished goods	1,641	1,437
Inventory, Net, Total	$ 1,641	$ 1,437

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Subsequent Events - Additional Information (Detail) (Subsequent Event, Share Purchase Agreement, KSCP, USD $) In Millions, unless otherwise specified	Apr. 30, 2013
Subsequent Event | Share Purchase Agreement | KSCP
Subsequent Event [Line Items]
Percentage interest agreed to acquire	50.00%
Price of interest agreed to acquire	$ 25

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Subsequent events:

3 Months Ended

Mar. 31, 2013

Subsequent events:

Note 16. Subsequent events:

On April 30, 2013, we entered into a Share Purchase Agreement with Chengdu Kanghong Pharmaceuticals (Group) Co. Ltd. (“Kanghong”) pursuant to which we agreed to acquire Kanghong’s 50% interest in KSCP in exchange for $25 million, payable in installments through September 2015. The acquisition is subject to customary closing conditions, including certain regulatory approvals. Upon completion of the acquisition, KSCP will become a wholly-owned subsidiary, and KSCP’s assets and liabilities, as well as its financial results, will be reported on a consolidated basis, rather than using the equity method of accounting to report our share of KSCP’s net income or net loss.

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Accrued liabilities (Tables)

3 Months Ended

Mar. 31, 2013

Accrued Liabilities

Accrued liabilities at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013		December 31, 2012
Payroll and employee benefits	$	2,460	$	1,211
Sales and marketing		5,501		5,649
Other accrued liabilities		455		509
	$	8,416	$	7,369

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Related Party Transactions - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2013 Sagent Agila LLC	Dec. 31, 2012 Sagent Agila LLC	Mar. 31, 2013 KSCP
Related Party Transaction [Line Items]
Receivables from related party		$ 2,540	$ 1,404	$ 2,190
Payable for the acquisition of inventory		5,566	7,026
Distributed profit sharing receipt	$ 228	$ 1,852

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Changes in Investment of Kanghong Sagent Pharmaceutical Corporation Limited (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule of Equity Method Investments [Line Items]
Investment at beginning of year	$ 19,622
Equity in net loss	443	456
Investment at end of year	18,295
KSCP
Schedule of Equity Method Investments [Line Items]
Investment at beginning of year	17,461
Equity in net loss	(984)
Currency translation adjustment	31
Investments	11
Investment at end of year	$ 16,519

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Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income (loss)	$ 9,838	$ (8,289)
Other comprehensive income, net of tax
Foreign currency translation adjustments	31	225
Unrealized gains on available for sale securities	(59)	113
Total other comprehensive (loss) income, net of tax	(28)	338
Comprehensive income (loss)	$ 9,810	$ (7,951)

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Intangible assets, net

3 Months Ended

Mar. 31, 2013

Intangible assets, net

Note 4. Intangible assets, net:

Intangible assets at March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013							December 31, 2012
	Gross  carrying amount		Accumulated amortization			Intangible assets, net		Gross  carrying amount		Accumulated amortization			Intangible assets, net
Product licensing rights	$	3,256	$	(1,667	)	$	1,589	$	3,156	$	(1,541	)	$	1,615
Product development rights		1,382		—			1,382		2,662		—			2,662
	$	4,638	$	(1,667	)	$	2,971	$	5,818	$	(1,541	)	$	4,277

Movements in intangible assets were due to the following:

	Product licensing rights			Product development rights
December 31, 2012	$	1,615		$	2,662
Purchase of product rights		100			—
Amortization of product rights		(126	)		(1,280	)
March 31, 2013	$	1,589		$	1,382

The weighted-average period prior to the next extension or renewal for the 18 products comprising our product licensing rights intangible asset was 62 months at March 31, 2013.

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

	Amortization expense
For the year ending:
March 31, 2014	$	1,793
March 31, 2015		340
March 31, 2016		158
March 31, 2017		120
March 31, 2018		110

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Fair value measurements (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Assets Measured at Fair Value on Recurring Basis

Assets measured at fair value on a recurring basis as of March 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	$	11,616	$	11,616	$	—	$	—
Corporate bonds and notes		31,765		—		31,765		—
Commercial paper		11,096		—		11,096		—
Short-term investments	$	42,861	$	—	$	42,861	$	—
Total assets	$	54,477	$	11,616	$	42,861	$	—

Assets measured at fair value on a recurring basis as of December 31, 2012 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	$	18,141	$	18,141	$	—	$	—
Corporate bonds and notes		13,358		—		13,358		—
Commercial paper		23,247		—		23,247		—
Short-term investments	$	36,605	$	—	$	36,605	$	—
Total assets	$	54,746	$	18,141	$	36,605	$	—

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Schedule of Estimate Amortization Expense over Each of the Next Five Years (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013
Finite-Lived Intangible Assets [Line Items]
For the year ending, March 31, 2014	$ 1,793
For the year ending, March 31, 2015	340
For the year ending, March 31, 2016	158
For the year ending, March 31, 2017	120
For the year ending, March 31, 2018	$ 110

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Commitments and contingencies

3 Months Ended

Mar. 31, 2013

Commitments and contingencies

Note 15. 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, alleging, among other things, that sales of the Company’s (i) zoledronic acid premix bag (4mg/100ml), 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), a generic version of Novartis’ Reclast^® ready to use bottle would infringe U.S. Patent No. 8,052,987 and the 241 Patent (Novartis Pharmaceuticals Corporation v. Actavis, LLC, et. al., Case No. 13-cv-1028). The suit, which also named Actavis as a defendant, alleged, among other things, that the sale of Actavis’ zoledronc acid vial (4mg/5ml), 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 against the Company and the other defendants, including Actavis. On March 6, 2013, the Company, began selling Actavis’ zoledronic acid vial, the generic version of Zometa^®. The Company believes it has substantial meritorious defenses to the case. However, the Company has sold and is continuing to sell Actavis’ zoledronic acid vial, the generic version of Zometa^®. Therefore, an adverse final determination that one of the patents is valid and infringed could have an adverse effect on the Company’s business, results of operations, financial condition and cash flows.