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Mint
31-07-2025
- Business
- Mint
Sun Pharma Q1 preview: High domestic, global specialty biz growth to boost revenue
An uptick in Sun Pharmaceutical Industries Ltd's domestic business and robust growth in its global specialty business are expected to boost the company's earnings for the June quarter. 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.
Mint
23-07-2025
- Business
- Mint
Indian Pharma Q1FY26: Strong domestic sales to cushion weakness in US markets
India's pharmaceutical companies are expected to deliver steady earnings growth in the June quarter, buoyed by robust domestic demand despite pricing pressure in the US on key products like Revlimid, said analysts. Aggregate revenue for the sector is forecast to rise about 9% year-on-year in Q1FY26, with Ebitda and net profit expanding about 8% and 2–6%, respectively, according to estimates from brokerages Nuvama and BNP Paribas. However, Ebitda margins may contract by 30–50 basis points due to erosion in US pricing. 'We expect US sales to decline 1% q-q (quarter-on-quarter) and remain volatile as the gRevlimid LoE (loss of exclusivity) is expected in the next few quarters and companies may race to gain volume share," BNP Paribas healthcare analyst Tausif Shaikh said in a research note dated 22 July. Indian drugmakers like Dr Reddy's, Cipla, Sun Pharma, Zydus Lifesciences, Natco Pharma and Aurobindo Pharma have been distributing generic versions of blood cancer drug Revlimid in restricted quantities in the US since March 2022, and will lose exclusivity in January 2026. This will open the market to unrestricted generic sales. '...most companies are set to face challenges in FY26/FY27 once the benefits of gRevlimid subside and margins return to normalised levels. For 1QFY26, we expect domestic formulation revenue growth to remain strong, while US business performance to remain company specific," the note said. US sales hit by price erosion In the US, which accounts for 30–40% of revenue for several Indian drugmakers, sales are projected to stay flat or grow marginally in Q1FY26. Price erosion in key generics, especially gRevlimid, remains a major drag, prompting companies to front-load shipments before further adjustments in January 2026. US sales of Aurobindo Pharma, Dr Reddy's, Cipla and Zydus Lifesciences are expected to be hit by price erosion in Revlimid, according to Nuvama. The brokerage expects 1% year-on-year growth in US sales for companies in its coverage. However, Zydus may post 4% growth in the US due to the incremental contribution of Mybetriq (Mirabegron) that is used to treat an overactive bladder. Sun Pharma's US revenue may grow 5% quarter-on-quarter, led by specialty products and higher Revlimid sales, but margins could narrow due to higher R&D and launch costs, Emkay Global analysts noted in a 15 July report. Lupin's US business is expected to gain from the Jynarque (Tolvaptan), used to treat kidney function decline. While Dr. Reddy's growth may be offset by margin pressure, BNP forecasts Cipla's US sales to remain flat, constrained by competition in Revlimid and Lanreotide. Lanreotide is used to treat acromegaly, where the body produces too much growth hormone and gastroenteropancreatic neuroendocrine tumors. Dr Reddy's is the first in the pack to kickstart Q1FY26 earnings for the pharma sector on Wednesday. Strong domestic sales The Indian pharmaceutical market saw a late surge in June 2025, with growth during the quarter primarily driven by cardiac, respiratory, CNS, and anti-diabetic therapies, said Emkay Global analysts. Indian branded formulations are expected to grow by 9–10% YoY, led by therapies such as cardiac, respiratory, CNS and anti-diabetics. BNP Paribas highlighted a strong uptick in IPM growth in June (11.5% YoY), lifting overall Q1 growth to 8.6%. Companies like Sun Pharma, Dr. Reddy's, Lupin and Cipla are forecast to outperform the industry average in India, with double-digit domestic revenue growth. Sun Pharma is expected to post its eighth consecutive quarter of double-digit India growth, while Cipla's domestic momentum is aided by a low base and recovery in the trade generics segment. The Nifty Pharma has declined 4.38% so far in 2025 against a 6.22% gain in the benchmark Nifty index.
