ValuePickr Forum

Sun Pharma - Will India's Largest pharma co make a comeback?

To my surprise there isn’t a separate topic for India’s largest pharma company. Though it is out of flavor in the current run up of Pharma/API in last few months. Let’s begin about future prospects and key challenges ahead of this company, will it able to regain its past glory?
Key issues:

  1. Halol plant is still to get clean chit from US FDA
  2. Are corporate governance issues behind the company
  3. Outlook of specialty generics in US markets and pricing pressure

Highlights as per Annual Report FY2019-20

Geography Revnue Mix Rs Billion Change vs P/Y
USA 33% 105 -1%
India 30% 97 32%
ROW 14% 45 31%
Emerging 17% 55 3%
API 6% 19 11%

Sun Pharma has highest Domestic Pharma Mkt Share & max. no. of brands in Top 300 with low product concentration risk

If Sun’s domestic biz got similar valuation as its MNC peers (GSK,Abbott), it implies >2/3rd of its current EV for just 30% of its biz

Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cash Flow from Operating Activities 2283 2234 3357 3959 5616 6686 7082 3907 2196 6555
Net Capex 2670 1239 2479 2055 11119 1910 2912 2146 3684 3238
Free CashFlow -387 995 878 1904 -5503 4776 4170 1761 -1488 3317

Source: Perpetuity, Tijori
Disclosure: Have Tracking position


Notes on Sun Pharma based on latest investor ppt -

No 1 pharma company in India
No 9 in US generics mkt
World ranking in generic pharma- 4th ( behind Mylan, Teva and Novartis. Aurobindo,Lupin and Cipla are ranked -7,8,9 )
43 mfg plants across the world
Present in 100 countries across generic and branded mkts

US business ( 33 pc of sales ) -

9th in US generics mkt, 2nd in dermatology
Present in generics, branded and OTC
US sales for FY 19-20- Rs 10500 cr

India business ( 30 pc of sales ) -

Overall rank- 1 ( mkt share at 8.2 pc ), Cipla and Lupin are ranked 3 and 5
Mkt leader in Chronic segment, strong postn in acute segment
31 brands among top 300 brands
FY 19-20 sales at Rs 9700 cr
Leadership postn among the following Doctor Categories - Psychiatrists, Neurologists, Cardiologists, Orthopaedics, Gastroenterologists, Nephrologists, Diabetologists, Dermatologists,Urologists, ENT and Consulting Physicians
MR field force- 9700

Emerging Mkts ( 17 pc of sales ) -

Present in 80 countries
Focus mkts- Romania, Russia, SA, Brazil, Mexico
Local manufacturing across 07 EM countries
MRs - 2300

Other Developed Mkts ( 14 pc of sales ) -

Include- Aus, NZL, Canada, Japan, Western Europe
Focusing on development of complex generics and other differentiated products
Local mfg at- Canada, Japan, Aus, Israel and Hungary

India and Intl Consumer healthcare -

Brands like- Volini, Revital, Pepfiz, Abzorb etc in India
Also present in - Romania,Russia, SA,Ukraine, Nigeria,Myanmar, Poland, Thailand,Morroco,UAE,Oman - wrt consumer heathcare products
Enjoy strong brand equity in 4 countries ( India, Myanmar, Nigeria and Romania )
Dedicated field force in each Mkt

APIs ( 6 pc of sales ) -

Make 300 APIs
Provide backward integration
Aprox 20 APIs scaled up annually
14 API manufacturing facilities


ILumya - for plaque psoriasis , launced in US in 2018, Europe and Aus - Dec 18, Outlicensed for Greater China, Japan approval in Jun 2020

Cequa - for dry eye disease, US launch in Oct 19, Outlicensed for greater China Mkt

Absorica- for severe recalcitrant nodular acne, currently being sold in US

Levulan - for actinic keratosis, currently being sold in US

Odomzo - for LABCC, being sold in US,Germany, France, Switzerland, Denmark, Aus, Israel

Yonsa - used in prostate cancer, sold in US

Bromsite - used after catract surgery to relieve pain and inflammation, sold in US

Xelpros - used in ocular hypertension, sold in US

Infugem - a chemotherapy product, being sold in us and Europe

Key deals -

Acquired POLA Pharma in Japan in 2018 , access to Japanese derma mkt

Acquired Global rights for Cequa and Odomzo in 2016

Acquired Biosintez in Russia for local mfg footprint in 2016

Acquired 14 brand from Novartis in Japan in 2016

Acquired Insite Vision in US in 2015, strengthens opthal portfolio

2015 - merged Ranbaxy with itself

2012 - acquired Dusa pharma in US in 2012, got sterile injectable mfg capability in US

2010 - Acquired Taro Pharma ( Israel ) , access to US derma mkt

1997- Acquired Caraco entry in US mkt

Disc: invested drom Rs 480 levels


For starting a new thread on a company, you need to put up detailed stock analysis. Your content is not sufficient so this thread is locked till you comply.

Domestic Buisiness

In FY20, SPLL which accounts for ~70% of domestic business and ~20% of Consol. Revenue, generated 50% of Sun Pharma’s Reported EBITDA.

Sun’s Specialty Investments are a drag currently. When can it turnaround?

Risk: Corporate Governance issues were highlighted last year by whistle blower and Money life. Regulatory risk is also significant from FDA and co is finding not easy to get clearance for Halol. Export business is cyclical (commodity) so pricing pressure will may be there


Some excerpts from Sun Pharma’s latest AR wrt their Speciality Products -

Total speciality revenues at - $ 430 million - aprox 3100 cr ie 9 pc of total revenues.

Speciality product launches in US in last 1 yr -

CEQUA in Oct 19 - for dry eye disease - aprox 1.6 cr patients in US.

ABSORICA LD in Feb 20 - capsules for management of severe recalcitrant nodular acne.

EZALLOR SPRINKLE capsules in Jul 19 - for treatment of elevated lipid disorders in people who have difficulty swallowing ( mostly aged patients ).

DRIZALMA SPRINKLE in Oct 19 - an SNRI drug used is psychiatry for treatment of derpression for patients who have difficulty in swallowing ( mostly aged patients ).

New Mkts for speciality products -

Launched ILLUMYA ( Tildrakizumab - for plaque psoriasis ) and CEQUA in greater China via licensing arrangements with CMS China. Also helps Sun enter greater China mkt - second largest pharma mkt in the world.

Also launched ILLUMYA in Japan.

Entered licensing arrangement with Hikma Pharma for selling ILLUMYA in MENA region.

In Nov 19, Sun Pharma entered into a licensing arrangement with Astra Zeneca to introduce a novel Infusion therapy Oncology drug. Sun will file, get regulatory approvals and make and supply this to Astra to be sold in China.

In Jan 2020, Sun entered into an exclusive licensing arrangement with Rockwell Medical to commercialise TRIFERIC ( iron replacement and haemoglobin maint drug ) in India. Rockwell will get royalty payments on the sale proceeds.


Sun Pharma’s manufacturing footprint -

Formulation facilities - Total 29

Country wise -

India - 14
US - 3
Japan -2
Canada - 1
Hungary - 1
Israel - 1
Bangladesh - 1
South Africa - 1
Malaysia -1
Rommania -1
Egypt - 1
Nigeria - 1
Russia - 1

API manufacturing facilities - Total - 14

Country wise -

India - 9
Australia - 2
Israel - 1
US - 1
Hungary - 1


“Sun Pharma has taken a 10-to-20-years call to become a strong speciality generic global company, and in order to get there, it will have to go through the phases of volatility in its profits because it will have to keep in-licensing new assets for the speciality business. The strategy makes sense in the long term but the investment horizon of investors needs to match the horizon of the promoters,” says Aditya Khemka, fund manager at InCred AMC.

The company has the past record of turning around businesses and a strong balance sheet to pursue organic as well as inorganic growth opportunities. Now it is critical for Sun Pharma to win the speciality drugs game.
The Indian branded generics business has high operating margins of 30-35% and the company expects revenue growth to be in line or higher than industry average.
With challenges in the US business mounting, Sun Pharma had in the last two to three years shifted its focus to India and other emerging markets. The US market contributed over 50% to its revenue in FY16, but accounted for 33% in FY20. Meanwhile, the share of the India business in its total revenue increased from 25% in FY16 to 30% in FY20.

Sun Pharma started investing in its speciality business around 2013-14 and made several acquisitions to create its current portfolio. According to some estimates, the company has invested around USD2 billion in the speciality drugs business so far.
Sun Pharma is the only Indian company to have made some inroads into speciality drugs with a portfolio of nine products commercialised in the US market. Its product basket comprises Ilumya, Cequa, Absorica, LevulanKerastick, Odomzo, Yonsa, Bromsite, Xelpros, and Infugem.


Observation by Perpetuity
#SunPharma reported highest ever Global Specialty revenue @ $148mn,+25% YoY & +37% QoQ

27% of Sun’s US+RoW sales is from Specialty in Q3FY21

Specialty transition in Reg markets is a painful process requiring Promoter’s deep conviction to stay put…


No doubt about their business scope, growth potential and vision .The only problem is reputation of Promoters and it is seriously dented .


There’s huge no. of shares as per nse data being revoked / pledged multiple times in Feb and March (last 2 months)… Any implications due to this?

Highlights from management commentary

  • Global Specialty sales stood at USD139m for 4QFY21 v/s USD143m QoQ. The QoQ drop was attributable to increased buying at the end of the calendar year and the adverse impact of the pandemic situation.

  • SUNP garnered global sales of USD143m from Illumya, up 51% YoY.

  • SUNP remains on track to drive Illumya sales using a) the continuous involvement of opinion leaders, b) an expanding prescriber base, and c) better traction from existing patients.

  • SUNP is building a Biosimilar portfolio for launch over CY28–30. We are yet to see clarity on the amount of investment needed for product development as well as building capacity.

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Highlights of Q1FY22 consolidated financials
 Consolidated sales from operations at Rs. 96,694 million, growth of 29% over Q1 last year and 14% over Q4
last year.
 India sales at Rs. 33,084 million, up 39% compared to Q1 last year
 US finished dosage sales at US$ 380 million, growth of 35% over same quarter last year
 Emerging Markets sales at US$ 218 million, up by 25% over Q1 last year
 Rest of World sales at US$ 185 million, up by 35% over Q1 last year
 R&D investments at Rs. 5,926 million compared to Rs. 4,206 million for Q1FY21.
 EBITDA at Rs. 27,718 million, up by 59% over Q1 last year, with resulting EBITDA margin of 28.7%
 Adjusted net profit for quarter was at Rs. 19,792 million, up by 73% YoY, after excluding the exceptional items
of Rs. 6,311 million and relevant minority interest of Rs. 960 million. Adjusted net profit margin at 20.5%
compared to 15.3% for Q1 last year. Reported net profit for Q1FY22 was at Rs. 14,442 million.


Will Specialty Help Sun Pharma Gain its Lost Glory?

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