Sun Pharma to benefit from strong outlook for its specialty portfolio


MUMBAI: Shares of Sun Pharmaceutical Industries Ltd have been hovering near the 52-week high hit earlier in November, with the stock having given a return of around 22% year-to-date. The upswing has largely been a result of the robust performance of the company’s specialty product portfolio.

Sun Pharma’s global specialty business grew 27.5% year-on-year in Q2, driven by products as Ilumya, used to treat psoriasis; Cequa, an ophthalmology product; and Winlevi, a dermatology product. These helped company’s US sales rise 14.1% year-on-year (YoY) during Q2 despite the US subsidiary Taro reporting marginally lower sales.

Going forward, analysts remain positive on the specialty product portfolio.

Sun Pharma’s Ilumya should perform well, said analysts at Jefferies India Pvt Ltd. in their report dated 24 November.

The optimism is boosted by the fact that AbbVie’s psoriasis treatment product Skyrizi clocked better than expected sales in nine months calendar year 2022 and the sales guidance for the product was revised upwards by 6%. The product is doing well in the psoriatic arthritis segment as well and the company expects 10% of global sales from the indication, as per analysts.

Sun Pharma is also conducting Ilumya’s clinical trials for psoriatic arthritis indication, which are expected to be complete by 2023-24. Both Skyrizi and Ilumya are anti-IL23 drugs and Skyrizi’s performance could be a good indicator for Ilumya’s future prospects, said analysts at Jefferies.

In Europe, Ilumetri (tildrakizumab out licensed by Sun to Almirall) continues to do well, with 2022 sales growth guidance of 46% YoY. 

Analysts at Jefferies believe the Street’s base case expectation for Ilumya is that the product will continue to do well, and the base case is assuming that Stelara (another drug used in same indication) going off-patent in 2023 will not have a material impact on its sales.

Many other analysts already have maintained positive view on Sun’s specialty portfolio. Sriram Rathi at BNP Paribas Securities India Pvt. Ltd has raised estimates on higher specialty sales during Q2. The FY23-25 revenue, earnings estimate have been raised by 0-1% and 3-5% respectively, factoring in higher specialty sales and a better gross margin. BNP Paribas expects Sun Pharma to report a CAGR (compound annual growth rate) of 10.5% for revenue and 11.9% for earnings over FY22-25, driven by high-value businesses, India and global specialty.

The company’s domestic formulation sales contributing almost third to overall revenues, had grown 8.5% growth year-on-year. Revenue from the domestic formulations segment grew 10.9% in 2QFY23 on a like-to-like basis, excluding COVID-related sales in 2QFY22.

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