Threat from competition aside, Sun Pharma sees steady growth prospects

Sun Pharma has seen some revival in market sentiment of late. The confidence in growth prospects is increasing with the company’s specialty product range in the US shaping up well. Slowdown in sales of global specialty products, witnessed during the lockdown, is also behind for the company.

The Street though is keeping a close watch on the competition setting in for its key specialty products. The delayed entry of Teva’s generic of the company’s acne treatment product Absorica could be good news as it would give more time to Sun Pharma for its prescription conversion.

Teva was expected to launch the generic of Absorica on 27 December. Sun Pharma, expecting competition in one of its key products, had been proactively shifting its prescription share to low dose variants (Absorica LD).

“Although Teva launch may happen sooner or later, any delay is an opportunity for SUN as Absorica LD could garner more market share," said analysts at Investek Bank Plc (UK).

Meanwhile, the company's management indicated that besides the Absorica LD shift, there are other strategies to minimise the impact. The Street will eye the same.

The entry of competition in the arena, however, has already been factored in, say analysts. The company's other products are shaping well too. Analysts at JM Financial Institutional Securities Ltd said they see multiple drivers of a sustained earnings momentum, including Sun’s specialty portfolio reverting to its normalized growth trajectory with prescriptions in Ilumya and Cequa now exceeding pre-covid levels. Illumya is indicated for the treatment of plaque psoriasis, while Cequa is for treating dry eye disease.

A pickup in the US specialty business, coupled with likely traction from new product launch pipeline, would fuel growth of the US business, say analysts. The company’s expenses related to specialty product development are also likely to reduce. The geographic expansion and increasing penetration for specialty portfolio, in markets other than the US, would be another growth driver for Sun Pharma.

The growing India business is also likely to support earnings. The company’s chronic portfolio in India has continued to fair well and rebounding acute portfolio growth post lockdown may aid domestic growth. Healthy growth in chronic therapies along with new launches gaining traction and a possible improvement in acute therapies may fuel growth in the domestic formulations business, say analysts at Sharekhan.