Sun Pharma Q1 preview: High domestic, global specialty biz growth to boost revenue
India's largest drugmaker, which has posted steady mid-to-high single-digit growth for eight consecutive quarters, is expected to see its first-quarter revenue increase 7-8% year-on-year, according to brokerages Nuvama and Kotak Securities.
Sun Pharma is set to post its financial results for the first quarter on Thursday, 31 June.
Its US generics business is expected to see sequentially higher sales of 3-5%, aided by a quarter-on-quarter increase in specialty sales, and higher sales of blood cancer drug Revlimid, which is expected to lose exclusivity next year.
Sun Pharma's global specialty business could grow 13% year-on-year to $300 million in the first quarter driven by an uptick in prescriptions of its drugs like Ilumya, Winlevi, Cequa, and Odomzo, analysts at Kotak Securities said in a note dated 4 July.
The company's Revlimid sales for the quarter are pegged at $33 million, up from $20 million in the January-March quarter, according to Emkay Global.
In the fourth quarter of 2024-25, Sun Pharma announced that it would be investing $100 million in FY26 for the launch and commercialisation of its new specialty product pipeline in the US. '... this investment will enable us to significantly strengthen our specialty business for the future,' chairman and managing director Dilip Shanghvi told investors during a post-earnings call in May.
This one-time expense is expected to weigh on the drugmaker's margin on its earnings before interest, tax, depreciation, and amortization. However, lower spending on research and development in the first quarter could lead to some improvement.
'While Sun Pharma has guided for $100 million costs related to the launch of new specialty products, we believe its ebitda margin would see some improvement in the first quarter, while the remaining quarters may see some pressure,' BNP Paribas analyst Tausif Shaikh said in a note.
Sun Pharma's ebitda margin for the first quarter is expected to be 29%, with ebitda growing 10% year-on-year, according to Nuvama.
In the fourth quarter, the company's total revenue from operations increased 8% year-on-year to ₹ 12,958.8 crore. Ebitda was up 22.4% at ₹ 3,716 crore, with margins at 28.7%. Net profit, however, fell 19% year-on-year to ₹ 2,154 crore due to exceptional items, including an impairment on an investment.
Sun Pharma's first-quarter sales are pegged to grow at 10.5-12% year-on-year, following healthy double-digit growth in domestic sales for seven consecutive quarters.
Its US generics growth, however, is expected to remain subdued in the near term due to plant-related issues and price erosion in its base business, HDFC Securities said in a 11 July note.
'Moreover, Sun Pharma doesn't have major volume share in gRevlimid. Going ahead, we assume modest growth on the back of new approvals (gJynarque, gXeljanz XR, liraglutide, gOpsumit, gIbrance etc.),' HDFC Securities stated.
Sun Pharma delivered a compound annual growth rate (CAGR) of 10% in sales between FY19 and FY25, HDFC Securities said, adding that it expects a similar CAGR for the next three years until FY28, with a steady ebitda margin of 29%.
In FY25, Sun Pharma's total revenue from operations rose 8.4% to ₹ 52,578.4 crore, driven by domestic growth and its global specialty business. The drugmaker expects its consolidated revenue to rise in mid-to-high single digits in FY26.
However, the company's size is a major hurdle in sustaining double-digit growth, said analysts at Elara Securities in a 22 May note.
The brokerage estimates Sun Pharma will be able to maintain only high-single-digit percentage growth rate beyond FY26. 'Large value-accretive M&A could help, given the large cash balance on the balance sheet,' it added.
All eyes are on Sun Pharma's specialty pipeline.
Earlier this month, the drugmaker announced it had settled a patent row with American biopharma company Incyte Corporation over its hair-loss drug Leqselvi, paving the way for its launch in the US. Leqselvi is pegged to be an over $200 million product over 3-4 years from launch.
In March, Sun Pharma acquired US-based Checkpoint Therapeutics, an immunotherapy and targeted oncology company, for $335 million. The drugmaker has received approval for Uloxcyt, which is used to treat metastatic cutaneous squamous cell carcinoma (cSCC) or locally advanced cSCC, and is planning a launch in FY26.
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