Sun Pharma gains on buzz of clearing Sebi inquiry

Sun Pharmaceutical Industries rose 2.83% to Rs 424.45 after the media reported that the market regulator, Sebi, cleared the drug major of charges of irregularities emerged.

According to media reports, a preliminary enquiry by the Securities and Exchange Board of India (Sebi) has found no merit in allegation of violation of securities laws, levelled by a whistleblower, against pharmaceutical major Sun Pharmaceutical Industries.

The enquiry followed allegations made by a whistleblower in a 150-page complaint to Sebi accusing Sun Pharma of committing corporate governance and tax-related offences and securities market-related violations.

Sebi had sought detailed answer on alleged fund diversion of Rs 42,000 crore, through the company's key distributor and subsidiary, Aditya Medisales (AML). It also sought clarification on the company's 2004 fund raising through foreign currency convertible bonds (FCCB). The investigation team is of the view that the matter does not require further probe, reports added.

Meanwhile, Sun Pharmaceutical Industries' chairman, Israel Makov, at the 27th annual general meeting on 28 August 2019 at Vadodara said that the global pharmaceutical market is estimated to reach $1.5 trillion by 2023, growing at a compounded rate of approximately 3-6%. The US pharmaceutical market is set to exceed $625 billion by 2023 recording a CAGR of 4-7%.

He added that the Indian pharmaceutical market is estimated to reach $28-32 billion by 2023, recording 8-11% compounded growth. This strong growth will be driven by rising per capita income, changing life-styles, growing incidence of chronic ailments, improving health insurance coverage and increased access to modern medicines driven by rapid urbanization and government's efforts.

The overall pharmaceutical spending in pharmerging markets, including India, is estimated to grow at 5-8% CAGR to $355-385 billion by 2023. As per AIOCD-AWACS Report, Sun Pharma is the market leader in India with about 8.2% market share with a significant lead over competition and the No. 1 ranking by prescriptions in 11 different classes of doctors.

The US psoriasis market was estimated at approximately $10 billion in 2018 and is expected to grow at 9% CAGR till 2024. The global market for psoriasis was estimated at approximately $15 billion in 2018 which is likely to grow at 9% CAGR to $24.6 billion by 2024. Ilumya's commercialization across multiple geographies targets this large addressable market, Makov stated.

With the commercialization of some of the firm's key specialty products in the US, the company expects to incur significant branding and promotional costs. R&D investments for funding clinical trials of some of the specialty products are also likely to continue in future.

Given these factors, the firm expects a low to mid-teens topline growth in its consolidated revenues for fiscal 2019-20 over reported revenues of last year. The company's consolidated R&D investments for the year will be about 8-9% of revenues.

On BSE, 4.08 lakh shares were traded in Sun Pharma counter, compared to a 2-week average of 3.42 lakh shares. The stock hit an intraday high of Rs 431.60 and an intraday low of Rs 421.25.

It hit a 52-week high of Rs 678.80 on 6 September 2018 and a 52-week low of Rs 350.40 on 13 May 2019.

Shares of Sun Pharmaceutical Industries fell 3.49% in the past three trading sessions to settle at Rs 412.75 yesterday, 28 August 2019, from its close of Rs 427.70 on 23 August 2019.

Sun Pharmaceutical Industries is a pharmaceuticals company. The company's business segments include US business, Indian branded generics business, emerging markets, global consumer healthcare business and active pharmaceutical ingredients (API).

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