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Sun Pharma In The News

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India's Rising Sun Pharma Makes Dilip Shanghvi Country's Fourth Richest

India’s economy may have faltered but one sector that seems to be thriving is pharmaceuticals. Shares of the country’s generics champs have done well (with exceptions such as the scandal-hit Ranbaxy Laboratories) and none more so than the Bombay Stock Exchange-listed Sun Pharmaceuticals, India’s most valuable drugmaker.

This week, shares of Sun hit a peak on speculation of an imminent deal. It was reported that cash-rich Sun is looking to buy German generics firm Stada, though both parties were quick to issue statements saying they had no comments to make on “market conjecture”.

The company’s quarterly results Tuesday when it simultaneously announced a 1:1 bonus issue of shares, added to the buzz. Sun reported close to a 24% rise in net profits to $180 million on a 32% jump in sales to $547 million, beating market estimates.  For the fiscal year ending March 2013, the company’s sales crossed $2 billion for the first time.

Even Sun’s usually reticent founder Dilip Shanghvi was compelled to express himself in a press statement: “While it took us almost 27 years to record $1 billion in revenues, the next billion was added in just 3 years.” He also added that Sun was focused on enhancing its international presence which suggests that a deal could indeed be in the offing.

 Sun, which gets 70% of its revenues from overseas, thanks partly to a few strategic acquisitions, has been rising at a scorching pace. The stock has gained over 90% in the past year, outperforming the Sensex’s 22% rise over the same period. The company’s market cap of  close to $20 billion now exceeds the combined market cap of three of its rivals owned by billionaires-Yusuf Hamied’s Cipla Pharmaceuticals, Desh Bandhu Gupta’ Lupin Laboratories and the late Anji Reddy’s Dr Reddy’s Laboratories.

Shanghvi, who founded Sun 30 years ago as a maker of psychiatric drugs, is now India’s fourth richest person with a fortune close to $12 billion.  In 2012, he had entered the top 5 ranks for the first time. This week he overtakes construction magnate Pallonji Mistry to claim the fourth spot.  If Sun continues to shine, he could likely climb into third place, knocking off tech titan Azim Premji.