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

Stock Opportunities Not-so-Hidden Gems
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SUN PHARMA’s Speciality business -

Gross sales for Sun Pharma in FY 23 - 43,278 cr
Out of these - aprox 16 pc of sales ( to the tune of 7000 cr ) come from high margin, high entry barrier speciality products that are growing at > 20 pc CAGR. The same is likely to sustain in future as well

Going forward, this speciality drugs portfolio can grow to become really large with fat margins and high return ratios. Sun Pharma is not only investing heavily in R&D to churn out new Speciality drugs, they also have a big enough war chest for acquisitions and in-licensing

Lets go through some of these products that have been commercialised and the ones that are in pipeline -

Commercial products -

  1. Illumya - used against moderate-severe plaque psoriasis. Clinical trials are in Phase -3 for usage against Psoriatic Arthritis. Illumya is currently sold in US, Australia, Japan, Canada, Europe. Out licensed for China, North Africa Mkts
  2. Winlevi - topical treatment for acne vulgaris. Currently being sold in US, Canada
  3. Levulan - used to treat actinic keratoses of face/scalp and upper extremities
  4. Absorica - used to treat severe recalcitrant nodular acne. Current mkt - US
  5. Odomzo - used to treat locally advanced basal cell carcinoma ( a form of Skin Cancer ). Current Mkts - US, Canada, Germany, France, Denmark, Switzerland, Spain, Italy, Australia and Israel
  6. Cequa - used to treat dry eye syndrome. Current mkts - US, Canada. Out licensed for Chinese mkts
  7. BromSite - used to prevent ocular pain and post operation inflammation undergoing a Cataract Surgery. Current Mkt - US
  8. Xelpros - used for reduction of elevated intraocular pressure in patients with open angle glaucoma. Current Mkt - US
  9. Yonsa - used to treat patients with metastatic castration resistant prostate cancer. Current Mkt - US
  10. Sezaby - only product approved in US to treat seizures in Neonatal patients

Speciality / NCE pipeline -

CTP -543 - for Alopecia areata - completed phase - 3 trials

Illumya - for Psoriatic Arthritis - undergoing phase 3 trials

Nidlegy - for skin cancer - undergoing phase 3 trials

MM-II - to treat pain in Osteoarthritis - Completed phase 2 trials

SCD - 044 - for Atopic Dermatitis - undergoing phase -2 trials

GL0034 - injectable for type -2 diabetes - completed phase - I trials

Summary - Sun Pharma may well be on its way to becoming a speciality giant cum Innovator. It appears - it should only be a matter of time !!!

Disc - holding, biased, not SEBI registered

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Hello Everyone,

Anyone with any know how about how one can track all the US FDA observations/warning letters on the Indian Pharma Space?

Any input is appreciated!!

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its related to SPARC (Sun Pharma Advanced Research Company Ltd), 50% down from top in a month

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Sun Pharma Q1 FY25 Analysis: Key takeaways!!

Business Outlook:

  • Sun Pharma’s Q1 FY25 performance showcases a mixed bag, with the India business registering strong growth of 16.4% YoY, while the US and ROW markets saw some sequential decline.
  • The company’s specialty business continues to be a key focus area, with Ilumya and the upcoming launch of LEQSELVI™ expected to drive growth.
  • The integration of Taro is underway, with the management expecting synergies to evolve over time, though no significant short-term benefits are anticipated.

Strategic Initiatives:

  • Sun Pharma is actively investing in its R&D pipeline, with specialty R&D accounting for 45.2% of the total R&D spend in Q1.
  • The company is building in-house clinical development capabilities to enhance its ability to manage late-stage specialty product development.
  • Expanding the sales force in India and Emerging Markets to drive growth in the branded generics business.

Trends and Themes:

  • Increasing competition in the specialty segment, with the launch of products like Bimzelx and Sotyktu, is a key theme to watch out for.
  • Regulatory challenges and pending re-audits for certain manufacturing facilities, such as Halol, remain a concern.
  • The outcome of the LEQSELVI™ litigation will be crucial for the company’s specialty business growth.

Industry Tailwinds:

  • Favorable demographics and increasing healthcare awareness in Emerging Markets, such as India, present growth opportunities.
  • The global shift towards specialty products provides a tailwind for Sun Pharma’s specialty business.

Industry Headwinds:

  • Pricing pressures and competition in the US generic market.
  • Reimbursement challenges for new specialty products, as witnessed in the case of LEQSELVI™.

Analyst Concerns and Management Response:

  • Analysts are concerned about the sequential decline in the US business and the potential impact of the LEQSELVI™ litigation. The management has emphasized its intent to rigorously oppose the motion and remain committed to the product’s launch, subject to the court’s decision.
  • Regarding the integration of Taro, the management has stated that there are no significant short-term synergies expected, but the teams are working towards creating a more efficient single entity in the long term.

Competitive Landscape:

  • Sun Pharma continues to maintain its leadership position in the Indian pharmaceutical market, with an 8.6% market share.
  • In the US, the company faces stiff competition in the specialty segment, with the launch of products like Bimzelx and Sotyktu.

Guidance and Outlook:

  • The company has not provided any long-term financial guidance, but the management has indicated that the R&D spend is expected to step up in the subsequent quarters.

Capital Allocation Strategy:

  • Sun Pharma’s strong balance sheet, with a net cash position of $2.3 billion, provides flexibility for future investments and inorganic growth opportunities.

Opportunities and Risks:

  • Opportunities in the Emerging Markets, driven by favorable demographics and the company’s strong brand presence.
  • Risks from regulatory challenges, litigation outcomes, and pricing pressures in the US generic market.

Regulatory Environment:

  • Ongoing regulatory issues, such as the pending re-audit of the Halol facility, remain a key concern for the company.

Customer Sentiment:

  • The company’s strong brand presence and market leadership in India reflect positive customer sentiment.
  • In the US specialty segment, the management has highlighted the interest from payers for the LEQSELVI™ product.

Top 3 Takeaways:

  1. Sun Pharma’s focus on the specialty business, with the upcoming launch of LEQSELVI™ and the pipeline of other specialty products, is a key growth driver.
  2. The integration of Taro is a work in progress, with the management expecting synergies to evolve over time.
  3. Regulatory challenges and the outcome of the LEQSELVI™ litigation remain critical factors that will shape the company’s performance going forward.

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Sun Pharma -

Q2 FY 25 results and concall highlights -

Revenues - 13265 cr, up 10.5 pc
EBITDA - 3939 cr, up 24 pc
PAT - 3040 cr, up 28 pc

Cash on books @ aprox 21000 cr at the consolidated level

Region wise sales -

India sales @ 4265 cr, up 11 pc. Continues to be ranked no 1 in the IPM. Launched 14 new products in India in Q2. Company has 28 brands in top 300 brands in India - highest for any company in India. Also, the company is ranked no1 in 13 different therapeutic segments in India

US sales @ 4290 cr, up 20 pc led by strong growth in speciality products. Launched 2 generic products in US in Q2

EM sales @ 2431 cr, up 3.2 pc

RoW sales @ 1650 cr, down 3.5 pc. Price cuts in Japanese mkts contributed to revenue declines in RoW mkts. Expect this pricing pressure to continue in the next 2 qtrs performance as well

API sales @ 534 cr, up 8 pc

R&D investments @ 793 cr ( at 6 pc of sales ). Out of this 38 pc of money was spent towards speciality products. Company’s R&D pipeline includes 7 speciality molecules in various stages of clinical trials. Guiding for R&D spends @ 7-8 pc of sales for full FY 25

Speciality product sales @ 2373 cr, up 19 pc ( these are high margin products with significant entry barriers )

R&D pipeline -

Liqselvi - Approved in US for Alopecia Areata, awaiting launch

Nidlegy - Filed for approval in Europe for treatment of non-malenoma Skin Cancer

Illumya - for Psoriatic Artritis - undergoing phase 3 trials

MM-II - for pain management in Osteroarthritis - coupled phase 3 trials

Fibromum - for soft tissue sarcomas - undergoing phase 3 trials ( recently in-licensed from Philogen - A European Pharma company )

SCD - 044 - for atopic dermatitis - completed phase 2 trials

GL0034 ( Utreglutide ) for obesity - completed phase 1 trials

The launch of Liqselvi is pending because of an ongoing litigation. Once a favourable judgement is out, the company is ready to launch the product ( ie within a few weeks )

Winlevi - is seeing good QoQ growth in prescriptions in US

Seeing very good traction for Illumetri in China in a short span of time post its launch

Company is very excited about their under trial molecule - Utreglutide

Open to use the cash on Books to acquire speciality assets in the Derma and Derma-Onco space. These are the two long term focus areas for the company. Don’t intend to enter other therapeutic areas as of now

Disc: holding, biased, not SEBI registered, not a buy/sell recommendation

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