Sun Pharma is an international pharmaceutical company based in Mumbai, India. It primarily synthesises and sells pharmaceutical formulations and ingredients, mainly in India and the United States. The formulations offered by the company are chiefly pertaining to cardiology, psychiatry, neurology, diabetology, and gastroenterology.
Sun Pharma’s total market cap, as of February 2018, is more than Rs.1,34,471 crore.
Company’s Wealth and PerformanceSun Pharma Q1 FY 2018-19 Results
- The company reported a jump in its consolidated profit of Rs.982.51 crore as against Rs.424.92 crore during the same period last fiscal.
- The sales of the drug major inclined by 16.35% to stand at Rs.7,224 crore compared to Rs.6,208.79 crore in Q1 FY18.
- Its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) grew by 46.6% to stand at Rs.1,607 crore as compared to Rs.1,096 crore during the same period last year.
- The India sales were up by 22% year-on-year to stand at Rs.2,152 crore, while its US finished dosage sales grew by 8% to stand at $380 million and the rest of world sales were down by 7% to stand at $107 million.
- The company reported its total revenue from operations decreased to Rs.26,489.46 as against Rs.31,578.44 crore in 2016-17.
- The net profit of Sun Pharma for the financial year 2017-18 stood at Rs.2,161.55 crore compared to Rs.6,964.37 crore during the fiscal ending 2017, down by 69%.
- For the year ending 31 March 2018, the company’s board has approved a dividend of Rs.2 each per share of Rs.1 each.
- As of 3 September 2018, the company’s stock ended 0.51% up at Rs.656.20 on the NSE.
- In the report for the Q3 FY18, Sun Pharma reported overall sales and income worth Rs.6,598 crore. However, when compared to the same quarter last year, this number translates to a 14% decline in growth driven mainly by the decline in US business.
- Except for the US operations, sales in all other regions of the world have improved considerably. In India, sales for the third quarter were reported to be at Rs.2,085 crore - a 6% increase over Q3 FY17 sales.
- Emerging Markets reported a steady increase in sales as well, with the number standing at Rs.1,221 crores, in contrast to Rs.1,160 crores in Q3 FY17. Similarly, sales in Rest of the World were found to be highly satisfactory.
- As for the investments geared towards Research & Development, they have been reduced to Rs.473 crore from Rs.613 crore for Q3 FY17. These funds are meant to finance the development of Sun Pharma’s ‘Global Specialty Pipeline’.
- The decline in sales in the US market is mainly because of the decline in sales of generic Imatinib and Olmesartan authorised generics.
- The reported net profit for this quarter was at Rs.365 crore, while the adjusted net profit was at Rs.878 crore. The discrepancy between the two figures is because of the one-time tax adjustment which was done in accordance with the US tax rates.
- Sun Pharma has also planned a through product offering in the US market. ANDAs (Abbreviated New Drug Application) have been approved for 418 products by the United States Food & Drug Administration (FDA), while 126 ANDAs are awaiting approval.
- The Sun Pharma shares opened for trading at Rs.571.50 on the 1st of January 2018 and closed for the day up by 0.51% to stand at Rs.574.05. With slight fluctuations over the course of the month, the scrip ended the month up by more than 8 points at Rs.579.90
- The stock dropped more than 25 points on the 1st of February to end the day’s trading at Rs.554.30, down by 4.41%. It rose to touch Rs.589.15 on the 12th before losing the momentum to stand at Rs.525.75; however, it recovered to end the month at Rs.535.35.
- On the 1st of March, the scrip ended the day at Rs.535.40 and dropped significantly and on the last day of trading for the month, the stock price of Sun Pharma stood at Rs.495.10.
- The scrip gained nearly 13 points to end at Rs.507.85 on the 2nd of April and remained stable throughout the month. The stock ended the month with gains at Rs.528.40.
- When the market opened for trading on the 2nd of May, the scrip lost 13 points to end the day at Rs.515.20. It touched an all-time low of Rs.443.75 as the company announced that its Q4 FY18 results missed estimates as it declined significantly compared to the same period last year; however, it gained nearly 40 points by the end of the month to close at Rs.480.35.
- The share price of Sun Pharma on the 1st of June grew by 4 points to end at Rs.484.35 and rose to touch Rs.571.30 on the 15th, remaining stable for the rest of the month before closing at Rs.564.00.
- The share price of Sun Pharma on the 2nd of July slipped by 3 points to end the day’s trading at Rs.563.15. By the end of the month, the scrip gained more than 5 points to close at Rs.568.50.
- It rose by more than 6 points on the 1st of August to end the day at Rs.574.65. The stock of the company continued to incline over the course of the month to end 75 points higher at Rs.652.85.
Sun Pharma Stock Returns in 2016 and 2017
- Sun Pharma share price at the start of 2016 was fluctuating around Rs.800 benchmark on BSE and NSE. A couple of events, namely Sun Pharma getting the approval by the Competition Commission of India (CCI) to sell formerly Ranbaxy Laboratories’ CNS segment in India to Strides, and the anticipation of Q3 results for FY16 took the stock price to Rs.836.80.
- By early February, Sun Pharma stock price had crossed Rs.850, driven by the updates on the sale of CNS divisions of erstwhile Ranbaxy to Strides, and the launch of Imatinib Mesylate in the USA.
- The share price of Sun Pharma soared to Rs.884.70 on February 12, 2016, when the Q3 results revealed that the net profit increased by almost four times to Rs.1,417 crore.
- Through March and April, Sun Pharma continued to ramp up its operations by signing a pact with AstraZeneca India for Type 2 diabetes, and also by acquiring the Novartis prescription brands in Japan. These events kept the Sun Pharma share price floating above Rs.800.
- By May, Sun Pharma stocks were being cautiously traded around Rs.800 on the anticipation of the FY16 and fourth quarter results. However, by the end of the month, the share price had moved up to Rs.830.
- After the annual report was released and the Q4 results were announced, the stock price took a nosedive to close at Rs.762.75 owing to the results not meeting the projected figures. Over the next couple of weeks, Sun Pharma shares traded steadily around Rs.750.
- Towards the end of June, the stock price soared by 2% on the announcement of buy back offer by Sun Pharma. This was followed by developments in European and American markets through July, which, by the end of the month, once again pushed the share price beyond Rs.820.
- However, post Q1 FY17 results, Sun Pharma share price on BSE and NSE slipped below Rs.800 once again. Things remained approximately the same that way until early November, when the share price plunged by more than 6% to hit a 52-week low of Rs.647.10. Nonetheless, the stock bounced back quickly on the back of a strong Q2 performance. The acquisition of a stake in Russia’s Biosintez also helped the cause.
- This rally did not last for long as USFDA issued observations for Sun Pharma’s unit in Halol. This led to Sun Pharma share price take a hit on NSE and BSE, and eventually, Sun Pharma ended the year at a closing price of Rs.614.70.
- The pharmaceutical giant commenced 2017 on a rather dull note as the shares were being traded close to Rs.640. The first couple of months saw the Sun Pharma stocks move carefully towards the Rs.700 mark. By the middle of March, the price of the stock did cross Rs.700, although it failed to stabilise at that point. Until the end of May, Sun Pharma stocks continued to fluctuate around Rs.650, after which Q4 FY17 results and full year results were announced.
- Owing to a poor performance in Q4, Sun Pharma hit a 52-week low of Rs.492.65. This resulted in the Sun Pharma stock to be traded for less than Rs.600 over the next few weeks. Despite the impressive ventures undertaken by Sun Pharma during this period, like the signing of an agreement with National Institute of Virology and Samsung BioLogics, the stock price failed to cross the threshold of 600.
- The Q1 FY18 results didn’t do much to restore the confidence of investors. After reporting a net loss in the first quarter, the stock price went as low as Rs.450. Over the course of next few weeks, Sun Pharma stock price did cross Rs.500, backed by updates on acquisitions and development. However, a poor performance in Q2 FY18 once again tanked the stock price by 3%.
- Sun Pharma ended 2017 with a closing price of Rs.571.15.
Should you invest in Sun Pharma right now?
- Sun Pharma is one of the largest pharmaceutical companies in the world, and became the largest pharma company in India after the acquisition of Ranbaxy.
- It is ranked at the 5th place in the United States and is expanding its presence in Europe and other emerging markets. Sun Pharma has more than 40 manufacturing facilities across the world, including India, Australia, Malaysia, Africa, and the United States. These facilities have been inspected by the suitable authorities, including the USFDA. They have positioned themselves astutely to focus on markets in Brazil, Russia, Romania and South Africa.
- Sun Pharma’s market share in India has increased considerably over the years. As of December 2017, their market share is 8.5%.
- More than 40% of their revenues come from the US market. In order to boost their performance there, they are preparing a thorough portfolio across multiple therapies. In fact, as of December 2017, 414 ANDAs, submitted by Sun Pharma, have been approved by the FDA.
- The acquisition is another area where Sun Pharma has done exceptionally well. Over the course of the last couple of years, they have acquired a controlling interest in many leading pharmaceutical companies like Taro Pharmaceutical Industries Limited of Israel, Biosintez in Russia, Pharmalucence in the US, et cetera. It has also acquired 14 brands from Novartis in Japan and soon followed it with acquiring global rights for OTX-101 & Odomzo.
- Their financial track record is impressive, to say the least. Their sales have increased exceptionally over the years. Furthermore, Sun Pharma has been quite consistent with returns as well.
- By the looks of it, it is evident that the company is built on strong foundations and has prepared itself to become a global leader in the pharmaceutical world. A high P/E ratio suggests that the stock may be overvalued, but after taking a look at their recent ventures and acquisitions, many experts will agree that it is worth buying this stock for a long-term investment. However, be on guard as the USFDA inspects the manufacturing units in India.
Sun Pharmaceutical is a leading prescription medicine provider in India and worldwide. Founded in 1983 by Dilip Shanghvi, the company principally deals in medicines pertaining to cardiology, diabetology, neurology, et cetera. In the 50 years since its inception, Sun Pharma has established manufacturing units across the world and completed several acquisitions in the process. Apart from offering formulations that are used in tablets, creams, capsules, et cetera, Sun Pharma also develops its own range of Active Pharmaceutical Ingredients (API). Their market share in India is presently the highest while in the US, they are at the fifth place. The company’s vision is to touch lives globally as a leading provider of valued medicines.
Israel Makov - Chairman
Prior to joining the Sun Pharma’s Board of Directors as the Chairman, Mr. Makov served as the President and CEO of Teva Pharmaceutical Industries Limited. He was with Teva for more than 13 years during which, he led the way for company’s worldwide expansion and made it the global leader in general pharmaceuticals. Furthermore, he is also the founder of Interpharm - Israel’s first biotech company. All these accomplishments have made him one of the most respected corporate leaders in Israel.
His alma mater is Hebrew University, Jerusalem, where he obtained a B.Sc. in Agriculture and M.Sc. in Economics.
Dilip Shanghvi - Managing Director
Mr. Shanghvi is the founder and managing director of Sun Pharmaceutical. He got the idea of manufacturing medicines when he was working with his father as a medicines distributor in Kolkata. After earning B.Com. degree from the University of Calcutta, he started Sun Pharmaceutical in 1983 with a capital of Rs.10,000. In his relentless pursuit to become the largest pharma company in India, he was honoured with several accolades including the Padma Shri in 2016. He was also ranked at the 8th place by India Today magazine in its ‘50 Most Powerful People of 2017’ list. His net worth, as of February 2018, is more than $11 billion.
Sun Pharmaceutical was established in 1983 by Mr. Shanghvi in Vapi. At the time, he started the company with just five products to treat psychiatric disorders. Over the course of that decade, products related to cardiology and gastroenterology were also introduced. As the company expanded, it started manufacturing products in other therapy areas as well, like neurology, gynaecology, oncology, et cetera. it also set up its research and development division citing the importance of research in the field of medicines.
From its humble beginnings, the company has moved on to become a global force in the world of pharmaceuticals. This has been possible primarily because of mergers and acquisitions, along with a strong international presence. Sun Pharma has also set up API and formulation plants across the world which were as per the international standards and have been approved by USFDA and UK MHRA (Medicines and Healthcare products Regulatory Agency).
Sun Pharmaceutical Industries Listing and Indices
The company is listed on the two major stock exchanges in India - NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). Sun Pharma stock price can be seen fluctuating on NSE and BSE during the market hours.
Sun Pharmaceutical Industries is also part of the major market indices in India like BSE SENSEX and NIFTY 50. While there are many pharma companies on NIFTY, there are only two pharma companies on SENSEX with Sun Pharma being one of them. In a way, the company represents the medicine sector in India, which is understandable given its market share. In addition to these indices, Sun Pharma is also a part of S&P CNX 500, BSE 100 and BSE 200.
Sun Pharmaceutical Industries Ltd.
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