 "Sun Pharma: All the right ingredients")
Outperforms Sensex
Market returns: 28.7%
Sun Pharma has consistently outperformed benchmark indices and its peers in the last one year. The key ingredient of its success has been its US business that now accounts for over half of consolidated revenues. In recent years, the company acquired a number of companies with significant presence in the US, including Caraco Pharmaceuticals, Taro Pharma, URL and DUSA. The result has been a compounded annual rate of 40 per cent growth (CAGR) in its US business in the last three years. In the December '13 quarter, US sales at $434 million was up 52 per cent over the same period last year. In rupee terms, it grew even faster at 79 per cent to reach Rs 2,679 crore.
While international business is becoming more important with each quarter, Sun continues to gain market share in India. The company is a clear market leader in speciality and chronic therapies. This also allowed the company to escape slowdown in its domestic sales, unlike its peers, after implementation of the new drug pricing policy earlier this year. During the 12 months ending January 2014, Sun Pharma's domestic revenues grew by 18.7 per cent to Rs 3,698 crore and its market share increased to 4.9 per cent, according to IMS-MAT data. This compares favourably with its peers, most of whom reported revenue decline in the domestic segment during the period.
The growth momentum in both the US and India market remains strong. Analysts at Anand Rathi see the US and India continuing to drive Sun Pharma's top line, at a CAGR of 24.7 per cent from 19.1 per cent during FY13-16. The company has raised its revenue growth forecast for FY14 to 29 per cent from 25 per cent earlier, in view of better-than-expected performance in the third quarter.
Market returns: 28.7%
Sun Pharma has consistently outperformed benchmark indices and its peers in the last one year. The key ingredient of its success has been its US business that now accounts for over half of consolidated revenues. In recent years, the company acquired a number of companies with significant presence in the US, including Caraco Pharmaceuticals, Taro Pharma, URL and DUSA. The result has been a compounded annual rate of 40 per cent growth (CAGR) in its US business in the last three years. In the December '13 quarter, US sales at $434 million was up 52 per cent over the same period last year. In rupee terms, it grew even faster at 79 per cent to reach Rs 2,679 crore.
While international business is becoming more important with each quarter, Sun continues to gain market share in India. The company is a clear market leader in speciality and chronic therapies. This also allowed the company to escape slowdown in its domestic sales, unlike its peers, after implementation of the new drug pricing policy earlier this year. During the 12 months ending January 2014, Sun Pharma's domestic revenues grew by 18.7 per cent to Rs 3,698 crore and its market share increased to 4.9 per cent, according to IMS-MAT data. This compares favourably with its peers, most of whom reported revenue decline in the domestic segment during the period.
The growth momentum in both the US and India market remains strong. Analysts at Anand Rathi see the US and India continuing to drive Sun Pharma's top line, at a CAGR of 24.7 per cent from 19.1 per cent during FY13-16. The company has raised its revenue growth forecast for FY14 to 29 per cent from 25 per cent earlier, in view of better-than-expected performance in the third quarter.
Though the recent US Food and Drug Administration (FDA) import alert on Sun's Gujarat plant raised some concerns, the unit's contribution to its overall sales is very small. The company had 12 FDA-approved facilities at the end of FY13, with six in US, three in India and one each in Canada, Israel and Hungry. This gives Sun adequate leeway on shifting manufacturing to other locations. Sarabjit Kaur Nangra at Angel Broking adds the company has successfully resolved similar issues in the past relating to Caraco facilities. Caraco recently received FDA approval for launch of schizophrenia drug Risperidone oral tablets, the first such approval the since FDA observations in January and May 2013.
Arathisundari Jayakumar at Elara Capital maintains her long-term positive stance on the company despite the FDA alert, given Sun's leadership in the speciality segments in India and growth potential in the US market. She expects Sun to continue to beat market growth in India, given its leadership presence in the fast-growing chronic ailments segment.
Arathisundari Jayakumar at Elara Capital maintains her long-term positive stance on the company despite the FDA alert, given Sun's leadership in the speciality segments in India and growth potential in the US market. She expects Sun to continue to beat market growth in India, given its leadership presence in the fast-growing chronic ailments segment.