Analyst Concall
Sun Pharma expects R&D spend to be 6-8% of sales FY26
This story was originally published at 23:11 IST on 22 May 2025
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--Sun Pharma: See R&D spend at 6-8% of sales FY26
--CONTEXT: Comments by Sun Pharma mgmt. in post-earnings call with analysts
--Sun Pharma: See co's absolute R&D spending rising
--Sun Pharma: See mid to high single digit topline growth in FY26
--Sun Pharma: To spend $100 mln to commercialise new specialty products FY26
--Sun Pharma: Would take up to 3 years to move Ilumya manufacture to US
--Sun Pharma: Open to strategic acquisitions only, size no bar
By Sunil Raghu & Madhu Kumar
AHMEDABAD/MUMBAI – Sun Pharmaceutical Industries Ltd. expects to spend 6-8% of its revenue in 2025-26 (Apr-Mar) on research and development, its management said in a post-earnings conference call with analysts. The guidance is in line with the analysts' view, who expected the company to announce an R&D investment of around 8% of sales in FY26.
Sun Pharmaceutical spent INR 8.17 billion, or 6.4% of sales, on R&D during the March quarter. The specialty R&D accounted for 36% of its total R&D spend during the quarter. For FY25, the total R&D spend was INR 32.48 billion, or 6.2% of the sales, compared to its guidance of 7%. In absolute terms, the spend on R&D is likely to be higher than what it was in FY25, the company's management said.
In addition to the spend on R&D, the company is looking to invest about $100 million on commercialisation of new specialty products in the field of diabetes and weight management, the company said. Sun Pharma's specialty R&D pipeline also includes eight novel entities in clinical trials stage. For March quarter, Sun Pharmaceutical's global specialty sales, which account for 20% of the total sales, were up 8.6% on year at $295 million.
Sales from the company's US formulations business declined 2.5% on year to $464 million in the March quarter. For FY25, sales were up 3.6% at $1.92 billion. US formulations account for 31.4% of the company's total sales. The decline in US business was led by a fall in generics sales, the management said. It further said it was unsure of the impact of any tariff barriers the Donald Trump administration may impose on the US business. Also, that it could take two-and-a-half to three years to transfer manufacturing of a product like Ilumya to the US.
The company said that its outlook for its other key market, India, remains robust as the company continues to grow faster than the industry. For the March quarter, the total consolidated sales from formulations made in India rose nearly 13.6% on year to INR 42.13 billion. For FY25, sales were up 13.7% on year at INR 169.23 billion. The company launched 10 new products during the March quarter in India with drugs for diabetes and weight management in the offing. India accounts for 32.9% of the company's total sales.
Sales in emerging markets were up 6.3% on year to $261 billion, while the rest of the world markets' formulations sales were up 2% on year at $200 million. Sun Pharma's active pharmaceutical ingredient sales for external clients during the March quarter were up 28.2% on year at INR 5.33 billion.
The drugmaker's consolidated net profit for the March quarter fell 19% to INR 21.50 billion from INR 26.55 billion a year ago. This was way below the Street's expectation of INR 28.9 billion. Sun Pharmaceutical's consolidated net sales rose 8.14% on year to INR 129.59 billion during the reporting quarter, again lower than the average estimate of INR 132.8 billion. Sequentially, consolidated net sales was down 5.24%, from INR 136.75 billion. For FY26, the company said growth in the top line could be in low- to mid-single digit range.
On the question of how the company proposes to use over $3 billion of cash on its books, the management said that it was open to strategic acquisitions. "…anything that we do, we should then be able to manage and manage it well. But size is not something which would kind of put us off," the company's management said.
Sun Pharmaceutical announced its March quarter and FY25 earnings after market hours Thursday. Shares of the company closed 0.76% lower at INR 1,718.70 on the National Stock Exchange. End
US$1 = INR 86.00
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Deepshikha Bharadwaj
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