SUN Pharmaceuticals 2020 Annual Report Takeaways!

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  • Talks about the neglected anti-infectives division (Focus area)
    • While the pharmaceutical industry has taken significant strides in developing cutting‑edge products in immunology, biologics, gene and cell therapy, etc., it has, barring certain exceptions, neglected developing new innovative products in the anti-infective segments.
    • A growing incidence of chronic ailments like diabetes, cardiovascular, cancer etc., coupled with better pricing for products in these segments has resulted in a focus on R&D skewed towards it rather than anti-infectives. 
  • The COVID-19 global pandemic may force both, the industry and governments, to revisit the importance of focusing on infectious disease research.
  • COVID ignited Localisation vs Globalisation: Supply chain network strategy is evolving as the pandemic has also highlighted the risks associated with the vendor and/or location concentration.
    • In Pharma biz, new vendor identification and qualification will be a time-consuming process. 
  • Leveraging IT infrastructure: There is now a higher focus on automation, digitalisation as well as increased dependence on analytical tools for decision making.
  • 2 products are undergoing Phase 2 trials that could be useful in COVID treatment
  • India Formulations: 30% of rev
    • 9700crs turnover after 15% YoY growth: Increased market share
    • No. 1 in India by sales | 31 brands among the top 300.
    • Present in the chronic portfolio: Strong brand equity among doctors
    • Increased sales force.
  • US: 33% of rev
    • 10500crs Turnover, flat YoY |  9th largest generic player in the US
    • 98 ANDAs and 5 NDAs awaiting approval |  538 approved products: 483 ANDAs & 55 NDAs
    • Witnessed a ramp-up in sales of our speciality products.
    • Generics business continued to face price erosion, driven by competitive intensity amongst manufacturers
      • Buying consortium pressures and a higher pace of generic approvals from the USFDA. 
    • The subsidiary, Taro, recorded a 4% decline in overall revenues to $645m for the year.
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  • Emerging markets: 17% of rev
    • Africa: growth slowed at 3% YoY
      • Witnessing a reduction in tender revenues in our South Africa business.
      • Excluding the impact of the tender sales, we have recorded a low double-digit growth for our emerging market portfolio.
  • ROW: 14% of sales | grew by 31%
    • Driven by increased sales in some key Western European markets and the full-year consolidation of the Pola Pharma acquisition in Japan.
  • API: 6% of sales
    • Portfolio of 323 approved DMF/CEP products | 431 total fillings
    • Up 11% YoY: New contracts & better realisations
  • R&D is the main driver: 6% of sales | Cumulative spend: 17000crs+
    • Global speciality business: 9% of rev | 4th largest global speciality generic player
      • Used in the treatment of chronic, complex or rare diseases, which require advanced research and innovation (biologic drugs for chronic ailments, immunology drugs, orphan disease treatments, gene and cell therapy, among others): likely 40% of the global pharmaceutical spend by 2024.
      • Include new product launches in the US & Japan, licensing with China manufacturers.
    • Reiteration of ILUMYA’S potential through long term clinical data. In Process of initiating Phase 3.
Decreasing R&D Investments
  • Blemish:  Halol facility was inspected by the USFDA in December 2019, which resulted in 8 deviations. The facility was subsequently classified as “Official Action Indicated (OAI)”, which implies that all new approvals for the US market from this facility will be put on hold till it is cleared by the USFDA.
  • Future potential:
    • expected to expand at a CAGR of 3-6% to US$1.5-1.6 Trillion by 2024: 
      • to be driven by the volume growth in pharmerging markets 
      • & Launches of high-end speciality innovative products in developed markets.
29 finished dosage manufacturing
facilities, while its 14 API facilities provide captive support.
  • India is the fastest-growing market; these are the enablers:

“Governments across the world try to control their healthcare budgets, which may lead to government-mandated price controls on pharmaceutical products.” (RISK)

  • 122 Subsidiaries & associates | Complex capital structure
  • Promoter Shareholding: 54.69%
  • Debt 6200crs: Mostly from unsecured loans (Manageable)
  • Permanent employees: 17759, total: 36000+
    • % increase in the median remuneration: 5%


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