SUNPHARMA Q3 2024-2025 Call Highlights: India Leads, US Slows, Specialty Expands!

Sun Pharmaceutical Industries Ltd., the fourth largest specialty generic pharmaceutical company in the world, in its Q3 earnings call discussed about strong Q3 performance with significant specialty business growth, though the company expects lower specialty sales next quarter due to inventory buildup at partner locations. The company’s India business grew 14%, driven by volume/new products and pricing, while maintaining leadership across therapeutic areas. While expanding its specialty focus globally, including Japan where generic business faces pricing pressure, management revealed a $200 million consumer health presence in emerging markets. The company mentioned that it is working on regulatory compliance, having invited FDA to inspect Halol facility, while planning to accelerate R&D clinical trials through increased trial sites despite current delays.

Sun Pharmaceutical Industries posted strong Q3 results, with consolidated net profit rising 15% to INR2,903.4 crore and revenue growing 10% to INR13,436 crore. The company maintained its leadership in India’s pharmaceutical market with an 8.2% share, as domestic formulations grew 13.8%. While US business saw a slight decline, the global specialty business generated $370 million in sales, including a $45 million milestone payment, and emerging markets showed healthy growth with formulation sales up 10.1%. The company achieved a solid EBITDA margin of 29.3%, though it faced some headwinds including INR316.2 crore in US settlement-related exceptional expenses and lower-than-targeted R&D spending at INR845 crore due to clinical trial delays.

Continue Reading: Discover the Vital Insights from Sun Pharmaceutical Industries Ltd.’s Earnings Call!

Financial/Operational Metrics:

• Revenue: INR13,436 crore, up 10% YoY.
• Net Profit: INR2,903 crore, up 15% YoY.
• EPS: INR12.1, up 15% YoY.
• R&D Expenses: INR845 crore; 6.3% of sales.
• EBITDA: INR4,009 crore, up 15.3% YoY.

Outlook:

• FY25 R&D Expense: Less than 7% of sales.

 

Analyst Crossfire:

• Strategic Focus on Specialty Expansion (Kunal Dhamesha – Macquarie): Specialty deals in new therapeutic areas are aligned with existing core fields like dermatology and ophthalmology. While opportunistic, the focus on these areas remains intact. Specialty revenue growth was strong across U.S. and ex-U.S. markets, with inventory build-up in ex-U.S. and seasonal strength in Q3 (Dilip Shanghvi – MD, C.S. Muralidharan – CFO, Abhay Gandhi – CEO, North America).

 

• Antibe Acquisition & Clinical Hold, LEQSELVI Litigation & Launch Timeline (Shashank K – Emkay Global, Bino Pathiparampil – Elara): FDA requires additional studies before lifting the clinical hold on Antibe’s lead drug. Sun Pharma sees it as a valuable non-opioid pain treatment with global potential. Oral arguments are expected in April. If the ruling is unfavorable, launch may be delayed until December 2026 (Dilip Shanghvi – MD).

 

• India Business & Field Force Expansion, R&D Delays & Milestones (Neha Manpuria – BofA): Growth is driven by branded generics, with minimal contribution from trade business. Expansion of the field force will be reviewed post-Q4. Clinical trial delays stem from protocol finalization and approvals. Efforts are underway to accelerate timelines by increasing study sites and geographies (Kirti Ganorkar – CEO, India, Dilip Shanghvi – MD).

 

• Japan Specialty Business & Pricing Pressure, Tax Rate Stabilization (Krish Mehta – Enam): Sun Pharma focuses on growing its specialty business in Japan due to pricing challenges in generics. The Novartis long-listed brands face annual price declines of 5-7%. Growth priorities include ILUMYA and Duac. The company expects a gradual tax rate increase due to sunset clause expirations. Tax rates should be viewed on an annualized basis (Kirti Ganorkar – CEO).

 

• R&D Spend & Specialty Sales Split, India Business Growth Drivers (Damayanti Kerai – HSBC, Anubhav Agarwal – UBS): Sun Pharma’s R&D spend for clinical trials will roll over into next year’s guidance. Specialty sales growth was evenly split between U.S. and non-U.S. markets, but the U.S. remains the largest absolute contributor. India’s 14% growth is broad-based across therapies, with IQVIA understating Sun Pharma’s numbers. Growth is led by a mix of volume, new product launches (50-55%), and price increases (Dilip Shanghvi – MD, Abhishek Sharma – IR, Abhay Gandhi – CEO, North America).

 

• Other Operating Income Surge, Nidlegy in Melanoma & European Strategy (Akash Dobhada – Motilal Oswal, Vishal – Systematix): The increase in operating income was due to recognition of certain grants during Q3. Sun Pharma sees Nidlegy as a differentiated melanoma treatment but will provide further clarity later. ODOMZO’s established European presence will support Nidlegy’s commercialization (C. S. Muralidharan – CFO, Dilip Shanghvi – MD).

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