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Informist, Thursday, Jul. 31, 2025

 

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--Sun Pharma: Majority of growth coming from prescription business 
--CONTEXT: Comments by Sun Pharma mgmt at post earnings analyst concall 
--Sun Pharma: No plan to add further mfg capacity in the US 
--Sun Pharma: Some one-time sales likely aided emerging market sales 
--Sun Pharma: Engaging with US FDA to find solution to Halol plant 
--Sun Pharma: Waiting to hear from US FDA on reply to observations on Halol 
--Sun Pharma: Staying with FY26 guidance for R&D spend 
--Sun Pharma: US generic business down YoY, QoQ

 

By Sunil Raghu and Arya S. Biju

 

AHMEDABAD/MUMBAI – Sun Pharmaceutical Industries Ltd. is staying with its earlier guidance of spending 6-8% of its revenue for research and development in 2025-26 (Apr-Mar), its management said in a post-earnings call with analysts Thursday. 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 9.03 billion, or 6.5% of sales, on R&D during the June quarter. Innovative R&D accounted for 41% of company's total R&D spend and stands at 11.8% of global innovative medicine sales for June quarter.

 

In addition to spend on R&D, the company has already announced its intent to invest about $100 million on commercialisation of new specialty products in the field of diabetes and weight management. Sun Pharma's specialty R&D pipeline also includes six novel entities in clinical trials stage. For June quarter, Sun Pharmaceutical's global specialty sales, which account for 19.3% of the total sales, were up 16.9% on year at $311 million. 

 

Sun Pharmaceutical Thursday reported a consolidated net profit of INR 22.79 billion for the June quarter, down 19.6% on year. The company reported a one-time exceptional cost of INR 8.2 billion during the quarter. A calculation by the company shows net profit to be at INR 29.96 billion, without exceptional one-time cost. Its revenue from operations rose 9.5% on year to INR 138.51 billion. While the company missed the Street's expectations on the bottom line it beat the view on the top line. Analysts had projected Sun Pharmaceutical's June quarter net profit at INR 29.62 billion on a revenue of INR 136.28 billion. This is the second successive quarter, after six quarters of double-digit growth, that the company has reported a year-on-year fall in net profit.

 

Sales from the company's US formulations business increased 1.4% on year to $473 million in the June quarter. The rise in US business was led by an increase in innovative medicine or specialty drugs portfolio, the management said. However, its growth was offset by decline in its generics business due to additional competition, both year-on-year and on a trailing basis. On being asked whether the company had any plans to improve its manufacturing footprint in the US, the company management replied in negative.

 

The company said that its performance for its other key market, India, continued to be robust and that it was ranked number one by prescription with 13 different doctor categories. It stated that majority of its growth in the domestic market is coming from prescription route. It also launched five new products during the June quarter, the company management said. For the June quarter, the total consolidated sales from formulations made in India rose nearly 13.9% on year to INR 47.21 billion. India accounts for 34.2% of the company's total sales.

 

Sales in emerging markets were up 5.1% on year to $298 million, while the rest of the world markets' formulations sales were up 15.5% on year at $219 million. Sun Pharma's active pharmaceutical ingredient sales for external clients during the June quarter were up 9.3% on year at INR 5.4 billion. Giving reason for jump in emerging market and rest of the world sales, the company management said that while there was not specific reason, "some one-time sales" is likely to have aided these sales.

 

On the topic of observations by the US Foods and Drugs Administration for its Halol manufacturing plant, the company said it was engaging with the US regulator to clear any of its doubts. While the company continues to take remediation measures, the Halol plant is reported to be under import alert since 2022. Any notice or observation by US FDA puts a question mark on sale of generics or other products for US market from this plant. The Sun Pharma's Halol manufacturing facility in Gujarat recently saw a US FDA good manufacturing practices inspection from Jun.2–Jun.13. This had resulted in eight Form483 observations, highlighting potential procedural and quality control lapses. The company management claimed that it has replied to certain observations and is waiting to hear from US FDA.

 

On Thursday, shares of Sun Pharmaceutical Industries moved up to INR 1,745.80 post the announcement of June quarter earnings, before they gradually gave away the gains and closed the day at INR 1,706.70 per share, down 1.6%, on the National Stock Exchange.  End

 

Edited by Deepshikha Bhardwaj

 

 

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