 "Sun Pharma")
India’s largest drug-maker Sun Pharmaceutical Industries posted a 15 per cent year-on-year (Y-o-Y) growth in its consolidated net profit at Rs 2,903.3 crore for the third quarter of the current financial year (Q3FY25), while revenue from operations grew by 10.5 per cent to Rs 13,675.4 crore. The increase in net profit can be attributed to strong performance in domestic and emerging markets.
Sequentially, revenue from operations grew by 2.9 per cent, whereas profit after tax (PAT) fell by 4.5 per cent. Both profit and revenue were in line with Bloomberg estimates.
Dilip Shanghvi, chairman and managing director (CMD) of the company, said: “Our performance in the quarter showed all-round improvement. Product sales in Global Specialty crossed 1/5th of overall sales. Our market share gain in India has been driven by industry-leading volume growth. Emerging markets demonstrated strong performance in spite of currency challenges across geographies. All our businesses remain well-positioned for the future.”
Domestic formulation sales increased by 13.8 per cent to Rs 4,300.4 crore year-on-year (Y-o-Y), representing 32 per cent of the company's total revenue. The company stated the growth was driven by volume and new product launches rather than price hikes. The firm introduced 12 new products in India during the quarter. For the first nine months of FY25, domestic formulation sales stood at Rs 12,710.0 crore, marking a 13.7 per cent increase Y-o-Y.
US formulation sales, constituting 30 per cent of total revenue, experienced a slight decline of 0.7 per cent, reaching $474 million. The decline in generic Revlimid sales impacted overall growth. Despite this, year-to-date US sales have grown by 5.7 per cent, with specialty drugs like Ilumya (injection that treats moderate-to-severe plaque psoriasis) and Domizol (to treat gastroesophageal reflux disease) showing strong momentum. Sun Pharma also launched four new generic products in the US during the quarter.
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Sales in emerging markets rose by 10.1 per cent to $277 million, accounting for 17 per cent of total revenue. In constant currency terms, the segment registered a 14 per cent growth Y-o-Y. For the first nine months of FY25, sales totalled $854 million, reflecting a 7.2 per cent increase over the previous year.
The rest of world (ROW) markets, excluding India, the US, and emerging markets, delivered strong growth of 21 per cent to $259 million, making up 16 per cent of total revenue. However, challenges in Japan, where generics face annual price cuts of 5-7 per cent, have impacted growth, and stabilisation is expected over the next few quarters.
Active pharmaceutical ingredient (API) sales also performed well, growing by 21.8 per cent to Rs 567.8 crore. The company’s branded consumer health business across geographies, particularly its $200 million OTC (over-the-counter) business in emerging markets, continues to be a key growth driver, though not reported separately.
Sun Pharma’s consolidated R&D investment for the quarter stood at Rs 845 crore, accounting for 6.3 per cent of total sales, compared to Rs 824.5 crore in Q3FY24. Specialty R&D accounted for 41 per cent of total R&D spend. Owing to delays in clinical trials, FY25 R&D spending has been revised downward to below 7 per cent of sales. For the first nine months, R&D expenditure stood at Rs 2,431.9 crore, or 6.2 per cent of total sales. Some R&D expenses have been deferred to the next financial year.
Speaking on this, C S Muralidharan, chief financial officer (CFO) of Sun Pharma, stated: “We continue to focus on building a robust R&D pipeline for both our generics and specialty businesses. Owing to delays in clinical spending, our R&D expenditure is currently trending below our initial guidance. As a result, we now expect our FY25 R&D spend to be less than 7 per cent of total sales."
The company is focusing on both specialty and generic drug development across various markets, with a specialty pipeline that includes seven novel entities currently in clinical trials. Specialty sales for the quarter stood at $370 million, up 24.8 per cent Y-o-Y, with equal contributions from the US and non-US markets.
Sun Pharma has a total of 541 approved ANDAs (abbreviated new drug applications), with 109 ANDA filings currently awaiting US FDA approval, including 28 tentative approvals. Additionally, the company has 51 approved NDAs, while 13 NDAs are still pending approval. During the quarter, Sun Pharma filed six new ANDAs and received two ANDA approvals.
Regulatory compliance continues to be a key priority for Sun Pharma, as the company works to bring its US facilities back in line with FDA requirements. In the specialty segment, fluctuations in sales have been observed due to partner-related inventory purchases, which have impacted revenue cycles. Royalties are structured based on these partner purchases and sales.
On the legal front, Sun Pharma recorded an exceptional item of Rs 316.2 crore due to a legal settlement in the US. The company is also awaiting the outcome of the Leqselvi litigation, with oral arguments expected in April.
The company’s stock fell by 0.12 per cent to Rs 1,743.10 a piece on the BSE. The results came during market hours on Friday.
