Sun Pharmaceutical Industries Ltd – the largest pharmaceutical company in India is engaged in the business of manufacturing, developing, and marketing a wide range of branded and generic formulations and Active Pharma Ingredients (APIs).

It operates in over 100 countries with Global specialty in Fast growing and Focused therapy approach. It is 12th largest company in US generics market and Largest pharma company in India. It is operating at scale in over 80 countries in emerging markets and expanding presence in Ex-US developed markets.

Company has 41 Manufacturing facilities across India, the Americas, Asia, Africa, Australia and Europe with manufacturing capabilities across injectables, sprays, ointments, creams, liquids, tablets and capsules. It has Vertically integrated network across six continents which enables high quality, low cost and a quick market entry across the geographies. It is among one of the few companies with integrated manufacturing of oncology, hormones, peptides, and steroidal drugs.

Under US Formulations business company reported Rs 153,493 mn sales with Over 590 approved products serving Specialty & Generics segment. Company generated large part of Specialty sales in the US from Dermatology, Ophthalmology and Onco Dermatology. It also ranked 2nd by prescriptions in the US dermatology market. It has a robust pipeline of 109 ANDAs & 13 NDAs pending approval with USFDA. Company offers Versatile dosage forms such as Liquids, Creams, Ointments, Gels, Sprays, Injectables, Tablets, Capsules, Drug-Device combination.

Under India Formulations business company reported Rs 148,893 mn sales with 8.1% market share in Indian market being No.1 company with 12 classes of prescribers. It is market leader in the chronic segment and strong positioning in the acute segment. It offers technically complex products and a complete therapy basket in India. It has strong brand positioning with 27 brands in India’s top 300 pharmaceutical brands. It recorded 180,670 Mn Formulation sales in India as of 12 months of Fy24 which is the highest compared to other pharma companies such as Abbott, Mankind, Cipla, Alkem, Intas, Torrent, Lupin, Zydus etc.

Figure 1Therapeutic breadth in Indian market

Under Emerging Markets (EM) Formulations business company reported Rs 86,195 mn sales with presence across 5 continents and Romania, Russia, South Africa, Brazil & Mexico being focus markets.

Under Rest of World (RoW) Formulations business company reported  Rs 67,128 mn sales and serves Western Europe, Canada, Japan, Israel, A&NZ+ with products serving Specialty & Generics segments.

Company’s Global Specialty business has Wide portfolio of 26 products marketed globally with major part of its business coming from US markets. Its product portfolio includes products as shown below:

Apart from this, company also strong pipeline of products such as Leqselvi, Nidlegy™, Ilumya, Fibromun, MM-II, SCD-044 and GL0034 at various stages of trials. Its Specialy products generated 1,039mn sales in Fy24 marking a growth of 25% CAGR from Fy20 and contributing 18% of its total sales.

Company’s Global Consumer Healthcare segment has Presence in over 25+ countries which includes India, Romania, South Africa, Nigeria, Myanmar, Ukraine, Poland, Thailand, Belarus, Kazakhstan, Nepal, Morocco, UAE, Oman etc. and ranks amongst the top 5 consumer healthcare companies. It has strong positioning amongst top 10 consumer healthcare companies in India, Romania, Nigeria & Myanmar.

Under Active Pharmaceutical Ingredients business segment company has product portfolio of approximately 380 APIs with 10-20 APIs scaled up annually in pipeline. It has 14 manufactuing facilities under this business segment. Company’s cumulative R&D spend stands at Rs 294 Bn to date and marked spend of 6.7% of sales in Fy24.

Fundamentals:

Financial Results:

As of Q3Fy25 Gross sales was at Rs. 134,369 million, growth of 10.5%, EBITDA at Rs. 40,090 million (including other operating revenues), up 15.3%, with resulting EBITDA margin of 29.3%, Adjusted net profit (excluding the exceptional items) for Q3FY25 was Rs. 32,196 million, up 24.1% and reported net profit for Q3FY25 was Rs. 29,034 million compared to Rs. 25,238 million during Q3FY24. Company’s R&D investments were at Rs. 8,450 million compared to Rs. 8,245 million for Q3FY24.

On business front and segmental front, India formulation sales were at Rs. 43,004 million, up 13.8%, US formulation sales at US$ 474 million, down 0.7%, Global Specialty sales were at US$ 370 million, including US$ 45 million milestone. Ex-milestones, up 17.5%, Global Specialty sales, ex-milestone, accounted for 21% of Q3FY25 sales, Emerging Markets formulation sales at US$ 277 million, up 10.1% and Rest of World formulation sales at US$ 259 million, up 21%.

Key Highlights:

1. Sun Pharma has entered into an agreement by which Sun Pharma will acquire Checkpoint, an immunotherapy and targeted oncology company. Checkpoint is a Nasdaq-listed commercial-stage company focused on developing novel treatments for patients with solid tumor cancers. Checkpoint has received approval from the U.S. Food & Drug Administration (FDA) for UNLOXCYT™ (cosibelimab-ipdl) for the treatment of adults with metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC who are not candidates for curative surgery or curative radiation.
2. Sun Pharmaceutical Industries Limited and Philogen S.p.A. ("Philogen”) have successfully completed patient enrollment in the Phase III FIBROSARC trial for Soft Tissue Sarcoma (STS). All ongoing Fibromun trials remain on track with their expected timelines.
3. The company also presented new data highlighting the clinical efficacy and safety of LEQSELVI™ (deuruxolitinib). LEQSELVI 8 mg tablets was approved by the U.S. Food and Drug Administration for the treatment of adults with severe alopecia areata (AA) earlier in 2024.
4. Sun Pharmaceutical Industries Limited and Israel-based Moebius Medical Limited announced that the U.S. Food and Drug Administration (FDA) has granted Fast Track designation (FTD) to MM-II (Large Liposomes of DPPC and DMPC) for the treatment of osteoarthritis knee pain. Planning for confirmatory Phase 3 clinical trials for MMII is underway.
5. Company has also launched Tedizolid Phosphate tablets 200 mg in India under the brand name “STARIZO”. STARIZO (Tedizolid Phosphate) is a novel, oxazolidinone-class antibacterial, used to treat Acute Bacterial Skin and Skin Structure Infection (ABSSSI). Sun Pharma has obtained rights from MSD to develop, manufacture and commercialize Tedizolid Phosphate in India.
6. Company has also completed the merger of Taro Pharmaceutical Industries Ltd. (NYSE: TARO) (“Taro”) with its subsidiary. As part of this merger, Sun Pharma acquired all outstanding ordinary shares of Taro other than the shares already held by Sun Pharma or its affiliates. As a result of the merger, Taro is now a private company and wholly-owned by Sun Pharma. Sun Pharma has been the majority shareholder of Taro since 2010.
7. It has also announced results from a Phase 1, multiple ascending-dose study evaluating the safety, tolerability, pharmacokinetics, and pharmacodynamics of GL0034 (Utreglutide) in obese adults. The data was exhibited in an oral presentation at the 84th Scientific Sessions of the American Diabetes Association (ADA).
8. Compamny has also entered into a non-exclusive patent licensing agreement with Takeda Pharmaceutical Company Limited (Takeda) to commercialise Vonoprazan tablets 10 mg, 20 mg in India under the brand name “Voltapraz”. Vonoprazan is a novel, orally active potassium competitive acid blocker (PCAB), used to treat reflux esophagitis and other acid peptic disorders.
9. The Australian Therapeutic Goods Administration (TGA) has also granted regulatory approval for company’s Winlevi® (clascoterone cream 1%). Winlevi® is indicated for the topical treatment of acne vulgaris in patients 12 years of age and older.
10. It has also signed an agreement with Bayer market and distribute a second brand of Finerenone in India. Finerenone, a patented medicine is indicated to reduce the risk of sustained eGFR decline, end-stage kidney disease, cardiovascular death, non-fatal myocardial infarction, and hospitalization for heart failure in adult patients with chronic kidney disease associated with type 2 diabetes mellitus.

Company has been maintaining a healthy dividend payout of 46.6% and it has delivered good profit growth of 23.4% CAGR over last 5 years. Company has also showcased Best-in-class profitability with 78% Gross margin compared to industry average of 63% and EBITDA margin of 27% compared to industry average of 22%.

Based on the comprehensive fundamental analysis of Sun Pharmaceutical Industries Ltd., the company demonstrates a strong market position, supported by its robust financial performance, diversified product portfolio, and extensive global presence. Its consistent revenue growth, prudent cost management, and strategic acquisitions have contributed to its resilience in the pharmaceutical sector.

The company's focus on innovation, research and development, and expanding its specialty drug segment further strengthens its long-term growth potential. Additionally, its ability to navigate regulatory challenges and leverage emerging market opportunities is indicative of sound management practices.

While external factors such as regulatory risks, competitive pressures, and currency fluctuations may pose challenges, Sun Pharma’s solid fundamentals and strategic initiatives position it well for sustainable growth. Investors may consider the company's stock as a long-term investment, keeping in mind market conditions and individual risk appetites. Sun Pharma may remain a reliable player in the pharmaceutical industry, with the potential to deliver consistent value to its shareholders.

HET ZAVERI

info@smartinvestment.in

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