The pharmaceutical sector is one of the most dynamic sectors in India. Pharmaceutical products are focused on drugs, sprays, ointments, injections, creams, pills, and capsules. The Indian market is a major market for these products, with the pharma and consumer healthcare industries driving much of the demand. One such business that helps the country expand and meet its demands is Sun Pharma. This business was successful in leveraging the government’s objectives. offers medications and pharmaceuticals to individual consumers effectively.
Now the question is: Is this the ideal time to buy Sun Pharma? The historical performance of the stock has been outstanding. So, let us do a deep dive into the company’s operations and check whether it is the right time to buy the pharma stock?
Industry Overview
India’s pharmaceutical industry is 3rd in the world by volume and 14th by value worldwide. At the moment, the pharmaceutical sector contributes about 1.72% of the country’s GDP. Nearly 200 nations around the world, including the US, Western Europe, Australia, and Japan, are home to the pharmaceutical industry’s products. Pharmaceutical and medical exports increased by 7.36% to US$2.43 billion in April 2024 from US$2.26 billion in April 2023. The last nine years have had an industry growth rate of 9.43% CAGR.
Within the domestic pharmaceutical sector, there are 3,000 pharmaceutical enterprises and 10,500 production units. Currently, Indian pharmaceutical companies supply more than 80 percent of the antiretroviral drugs needed to treat AIDS globally. India supplies 90% of the measles vaccine, which also provides 60% of the vaccine used globally.
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More Indian pharmaceutical companies than those in any other non-US country abide by US FDA requirements. Approximately 8% of the worldwide API market is made up of 500 API firms. India supplies more than half of Africa’s needs for generic medications, which also supply 25% of the pharmaceuticals used in the UK.
The government has allocated ₹2,143 crore for PLI in the pharmaceutical industry in Budget 2024 and allocated ₹89,287 crore for developing, maintaining, and improving the country’s healthcare system for FY25. This will boost Sun Pharma’s revenues and generate higher profitability.
Sun Pharma – Company Overview
Sun Pharma is the largest pharmaceutical market in India. It was incorporated in 1983. The company’s headquarters are located in Goregaon, Mumbai. With a global presence in more than 100 countries, Sun Pharma has diversified its business into specialty portfolios, branded generics, & active pharmaceutical ingredients (APIs).
Today, APIs exceed more than 380, which are used in-house and also marketed to customers in over 60 countries. Sun Pharma manufactures 14 API facilities located in India, Hungary, the USA, Israel, and Australia, and it operates in more than 80 countries.
Sun Pharma has an 8.5% market share in the domestic mark. With ₹ 1,69,102 million formulation sales in FY24, sun pharma holds the No. 1 position in India. Sun Pharma has 32 brands in India’s Top 300 Pharmaceutical Brands. The top 10 brands contribute 18% of India’s revenue. Sun Pharma has a strong field force of 14,000 sales. The Company has a 43,000+ employee base.
Business Segment Overview
These categories have a significant demand for Sun Pharma’s medications, treatments, and other pharmaceutical items, for which it sells over 30 billion doses annually, The segments are:
Psychiatry is a branch of medicine that focuses on the identification, management, and avoidance of harmful mental illnesses.
Antimicrobials are substances that are active against bacteria and are known as antibiotics. They might eradicate the germs or stop them from growing.
Neurology is the area of medicine that focuses on the nervous system, which includes the brain, spinal cord, and peripheral nerves.
Cardiology: This discipline encompasses the diagnosis and treatment of valvular heart disease, heart failure, coronary artery disease, and congenital heart problems.
Orthopedic: The area of surgery that treats disorders of the musculoskeletal system is known as orthopedics or orthopedic surgery.
Gastroenterology is the field of medicine that focuses on the digestive health part.
Ophthalmology: The diagnosis and treatment of eye problems fall within the clinical and surgical subspecialties of ophthalmology in medicine.
Nephrology: The study of the kidneys, kidney health, and the treatment of kidney disease is the focus of adult internal medicine and pediatric medical specialties.
Urology The field of medicine focuses on the reproductive system and urine system.
Dermatology is the area of medicine that deals with skin conditions.
Oncology: Oncology is a branch of medicine that deals with the study, treatment, diagnosis, and prevention of cancer.
Sun Pharma’s Competitive Edge
Highly Diversified Revenue Base
In FY24, Sun Pharma’s total geographical sales were ₹ 45,571 crore. 32% of the entire regional distribution and 68% of the company’s global sales are derived from international. It has 580 authorized specialty and generic drugs, the majority of which are sold in the United States in the fields of oncodermatology, ophthalmology, and dermatology.
Romania, Russia, South Africa, Brazil & Mexico, Western Europe, Canada, Japan, Israel, and Australia & New Zealand are the main revenue markets. Products are categorized according to the hospital’s specialties and generic offerings. Over 18% of revenues are made up of product specialties.
Geographic Sales of Sun Pharma
Research and development
The corporation has global research capabilities in clinical trials, dosage development, chemistry, biological support, and novel pharmaceutical development, with total R&D expenditures of ₹ 270 billion, or 6.7% of revenues. Employing more than 3,000 people, this important intellectual property promotes research and development with an emphasis on specialist products and non-infringing formulations.
By upgrading Sun Pharma to discover new drugs for novel conditions, this spending will increase the company’s ability to develop distinctive products and accelerate the expansion of its product line.
Performance between Nifty 50 vs Nifty Pharma vs Sun Pharma
Sun Pharma keeps a careful eye on the Nifty 50 and Nifty Pharma index movements. It shows that Sun Pharma’s returns are seen as exceptional when compared to indices.
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Financial Highlights Of Sun Pharma
In the financial year 2024, Sun Pharmaceutical saw a significant increase in revenue of 10.5%, reaching ₹ 48,497 crores compared to ₹ 43,886 crores in FY23. Over the past four years, from FY20 to FY24, the company achieved a solid revenue CAGR of 10.24%. In FY24, profit margins rose by 13%, amounting to ₹ 8,513 crores compared to ₹ 9,610 crores in FY23.
Their substantial R&D expenditures and solid foundations are the causes of their revenue growth. As a result, Sun Pharma was able to maintain solid financial indicators in FY24, including a 15% ROE, a 17.26% ROCE, and a 27% operating margin.
Future Outlook Of Sun Pharma
- The company anticipates strong single-digit consolidated top-line growth for FY ’25.
- Sun Pharma is focusing on complex generics and high entry barrier segments in the US business.
- Sun Pharma focuses on global consumer healthcare to maintain its dominance in the existing market through innovative solutions.
- For the upcoming year, R&D expenditures are expected to be around 8% to 10% of revenues.
- The company concentrates on assuring profitability while developing a solid, long-term business.
- Sun Pharma will continue to evaluate in-licensing opportunities for the latest-generation patented products.
- Sun Pharma focuses on research and development to develop complex products across multiple dosage forms.
Key Metrics Of Competitors
Price Targets from Experts and Brokers
Sharekhan: A “buy” rating and a price target of ₹ 1,800 per share. The brokerage considered some of the important drivers: global specialty sales contribute 18% of revenue, with Taro and the specialty segment managing US sales. Specialty products, such as deroxolitnib, a treatment for adults with severe alopecia areata, were anticipated to launch on July 24 and are expected to face no competition for at least five years.
Nedligy products, currently filed with Emergency Medical Services (EMS), are projected to be filed in Europe in the first half of CY24. Sun Pharma has completed Phase 2 trials for MM-ll, a therapy for joint pain, and has initiated Phase 1 trials for GL0034, which is intended to be licensed domestically as a GLP-1 to regulate blood sugar and appetite.
Sun Pharma’s consolidated cash balance has increased by $2.4 billion, earmarked for asset purchases and achieving a double-digit ROI. The company’s gross margins from its specialty portfolio are reported at 80% of revenue, one of the highest in the industry.
Conclusion
As the article draws to a close, let’s take a quick look at Sun Pharma’s impressive success in FY24. The company is well-established in US sales and has solid fundamentals. To create new products, they invest a lot of money in research and development, which increases the potential for industry demand. The government’s increased funding for the pharmaceutical and healthcare sectors suggests that the pharmaceutical industry will continue to rise.
In FY24, ROCE increased by 18.2%, while ROE increased by 16.7%. The company’s expenditures, financial figures, and government funding for development and expansion are outstanding. Thus, this would be the best moment to make long-term investments in Sun Pharma. What do you think about the future of Sun Pharma? Let us know your views in the comments section below.
Written by Shashi
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