Stock Market Today: Sun Pharmaceutical Industries Ltd has seen its share price rise almost 25% year-to-date. The Sun Pharma share price however also remains in focus due to the regulatory action by the US drug regulator pertaining to is Dadra and Halol manufacturing facilities.
Regulatory issues add to a concern
Recently the US Foods and Drugs Administration (USFDA) made public the contents of the warning letter for Sun Pharma’s Dadra Facility. Notably Sun also is facing regulatory issues pertaining to its Halol Gujarat manufacturing facility . With two facilities under scanner and issues unresolved , the concerns are bound to rise
Analysts at Jefferies India Ltd on the contents of warning letter have said that the warning letter for Sun’s Dadra plant includes repeat observation at the facility from the previous inspection and repeat violations at other facilities including Halol, which is under an import alert.
Ineffective quality systems as per Jefferies have been flagged as a key concern by the USFDA. However Jefferies estimate 2-3% revenue contribution from the Dadra plant, and though Sun’s dependence on generics for growth has declined over the years, Jefferies does not rule longer time for the resolution of systemwide violations.
Global Specialty business on strong footing
However Sun Pharma’s prospects are being driven by strong growth in in specialty products portfolio. Sun Pharma in order to counter higher competitive intensity in generics has been developing a specialty portfolio which is growing well and likely o drive growth. it is this specialty growth that will keep driving earnings per share.\\
Sun Pharma’s global specialty business currently at $ 1.0 billion has posted a CAGR (compound annual growth) of 25% during FY20-24.
Sun Pharma is expected to report 8% sales growth in Q1 as per estimates of PhilipCapital led by sustained double-digit growth in US specialty (up 25% year on year) and sequential ramp up in Revlimid generics sales ($ 70 million versus $ 60 million in Q4)
For Sun Pharma share price trading at around ₹1568 level, while Jefferies target price of ₹1785 indicates 13.8% upside, Elara’s target price also stands at 1637.
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