Categories Concall Highlights, Earnings, Health Care

Sun Pharmaceutical Industries Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Sun Pharmaceutical Industries Limited (SUNPHARMA) Q2 FY23 Earnings Concall

Q&A Highlights:

  • [00:16:46] Tushar Manudhane of Motilal Oswal asked about the sustainability of US generics business and its sales tracking well despite ANDA approval and filing reducing. Abhay Gandhi CEO replied that the pace of approval is not going down. SUNPHARMA added that it’s a strategic decision to focus on what products it wishes to launch than focusing on number of products.
  • [00:17:58] Tushar Manudhane of Motilal Oswal also enquired about Revlimid, if any query is pending from the company’s end. Abhay Gandhi CEO answered that the company is on track to meet its obligation and launch.
  • [00:18:19] Tushar Manudhane of Motilal Oswal asked about the India business having aggressive launches, if the company has a shift in focus from top brands to more broad based approach. Dilip Shanghvi MD clarified that launching new products is one of company’s levers. The focus is on increasing the contribution of new products in overall India business.
  • [00:19:16]  Prakash Agarwal with Axis Capital enquired about ILUMYA for Psoriatic Arthritis, given the R&D run rate being slower than expected, if the company is on track for primary end points. Dilip S. Shanghvi MD said that there’s some challenges in recruitment in some geographies. And the company is in the process of working out the new schedule and timeline.
  • [00:22:33] Prakash Agarwal from Axis Capital asked how the company sees margins playing out once R&D starts coming up. Dilip S. Shanghvi MD replied that generally the company doesn’t guide for EBITDA and margins. However broadly, SUNPHARMA’s focus would be to find a way to improve the overall profitability.
  • [00:23:24] Prakash Agarwal with Axis Capital asked if 3Q and 4Q are seasonally stronger for the specialty business. Abhay Gandhi CEO answered that it depends on the product. For derm indications, it’s seasonally stronger in Q3, Q4. However, in non-derm portfolio the seasonality doesn’t apply.
  • [00:25:51] Neha Manpuria of Bank of America asked about the drivers of GM expanding QonQ. Dilip S. Shanghvi MD answered that it is driven by higher specialty revenues and also products to some extent.
  • [00:26:52] Sameer Baisiwala from Morgan Stanley asked about the duration given the FDA gave OAI status in August. Abhay Gandhi CEO answered that if one gets an OAI, depending on the FDAs expectation, SUNPHARMA will continue to address all the observations and remediation efforts. However, the company added that FDA will mostly revisit the facility before it becomes a VAI.
  • [00:30:04] Sriram from BNP Paribas enquired about R&D activities and if in absolute amount it can grow by about 50% YonY. Dilip Shanghvi MD answered that even though in absolute terms it’s going up, in percentage terms it’s not as per the guidance. SUNPHARMA expect the R&D spend in the next two quarters to go up.
  • [00:36:37] Krish Mehta with Enam Holdings asked if the US generics business is bottoming out. Abhay Gandhi CEO replied that overall the generics markets the company is hoping to see the bottom for some years, but the hope is fading out.
  • [00:39:38]  Damayanti Kerai of HSBC asked about Odomzo, Levulan and Cequa, if these products are back to pre-COVID levels. Dilip S. Shanghvi MD clarified that all three products have grown YonY, irrespective of any period.
  • [00:48:29] Kunal Randeria from Nuvama enquired that from an R&D perspective, given the company is spending around 20-25% R&D on specialty, if the contribution in R&D is expected to increase meaningfully. Dilip Shanghvi MD replied that specialty will continue to be an important component of future investments.
  • [00:50:12] Sayantan Maji of Credit Suisse asked about WINLEVI, what was the temporary blip in prescriptions in 2Q23. Abhay Gandhi CEO said it’s a continuous process. It’s only a temporary blip and from next quarter onwards, SUNPHARMA will see an increase.
  • [00:50:26] Sayantan Maji of Credit Suisse also asked about the proportion of sales the company is getting from repeat customers in WINLEVI. Abhay Gandhi CEO replied that the company has typically around one-third of its customers who are repeat customers.

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