Innovative portfolio likely to maintain growth momentum for Sun Pharma

Specialty portfolio powers Q2; Ilumya, Leqselvi, Unloxcyt to anchor next phase

India’s largest pharmaceutical (pharma) company, Sun Pharmaceutical Industries, reported a strong revenue performance for the July-September quarter (Q2) of 2025-26 (FY26), driven by key segments and geographies. Better-than-expected margins and lower research and development spending lifted operational performance. With a robust product pipeline and sustained growth momentum across markets, several brokerages have upgraded the stock, while others have maintained their ‘buy’ ratings. 

Revenue for the quarter rose 8.6 per cent year-on-year (Y-o-Y), ahead of estimates, led by India (up 11 per cent) and the Rest of the World market (up 23 per cent). The US generics business continues to weigh on overall performance, but this was offset by 16 per cent growth in the global innovative medicines (specialty) portfolio.

 

Apart from pricing pressure on the generic version of blood cancer drug Revlimid, the company highlighted price erosion in other base business products as well. It remains uncertain when pricing conditions will stabilise.

 

The standout performance came from the global innovative portfolio, which grew 16.4 per cent Y-o-Y and 7 per cent sequentially. In the US, innovative medicine sales surpassed generics for the first time in Q2FY26. Elara Securities said that the launch of flagship product Ilumya — used to treat plaque psoriasis — in newer markets is helping offset slowing growth in the US, where the product is maturing.

 

Other contributors to the innovative portfolio included Cequa (for dry eyes) and the acne formulation Winlevi. The company recently launched the hair loss drug Leqselvi and plans to introduce the skin cancer therapy Unloxcyt soon. Analysts at Elara Securities, led by Bino Pathiparampil, believe these acquired products can help sustain growth in Sun’s innovative segment, with each expected to generate over $200 million in sales within three to four years.

 

The brokerage has raised its FY26 through to 2027-28 (FY28) core earnings per share estimates by 4-5 per cent and increased its target price from ₹1,871 to ₹1,968 per share.

 

InCred Equities also expects the innovative portfolio — which has delivered 23 per cent annual growth over the past five years — to maintain momentum in the medium term, supported by a strong launch pipeline.

 

Sun introduced Leqselvi in the US during Q2 of 2024-25 and expects it to contribute $110–125 million over FY26F (F: Forecast) through to 2026-27 (FY27). In addition, the planned launch of Unloxcyt in the second half of FY26F (potential revenue: $50–70 million over FY26F-FY27) and dossier filings in the European Union are expected to further strengthen the franchise.

 

The long-awaited launch of Ilumya for psoriatic arthritis by end-FY26 should further bolster overall Ilumya sales. Together, these products are expected to offset the Revlimid cliff and generate about $200 million in incremental US revenue. Given the superior margin profile of innovative medicines, analyst Yogesh Soni of InCred expects margin expansion to begin from FY27. The brokerage has upgraded the stock to ‘accumulate’ and raised its target price to ₹2,000 from ₹1,900.

 

Motilal Oswal, however, has trimmed its FY26-28 earnings estimates by 3–6 per cent, factoring in higher marketing expenses for global innovative medicines and a higher tax rate. It has nevertheless maintained a ‘buy’ rating, with a target price of ₹1,960. Analysts led by Tushar Manudhane said Sun continues to strengthen its branded portfolio across both developed and emerging markets. Product launches and deeper market penetration are expected to sustain the company’s strong growth trajectory, keeping it ahead of largecap peers in the Indian pharma space.