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Sun Pharma In The News

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Strong US Show Keeps Sun Shining

For Sun Pharma, its US business contin­ues to drive growth, contributing as it does to over half of the company's reve­nues, The company's December quarter performance was marked by a strong show by its US business, aided by a fa­vourable currency movement, the strong performance of Taroits overseas unit and sales of the generic Lipodox.

Its revenues in the domestic market, now contributing a little over one-fourth of the total revenues, grew 13%, outperforming the industry growth. Sun's consolidated net sales grew 33 % and its operating profit margin by 44 %. Taro's revenues grew 15 % and it now contributes one-third of the In­dian company's revenues. The contribu­tion of the company's latest acquisitions in the US market—DUSA and URL—has been insignificant in the December quar­ter. Considering that the currency benefit may not sustain and Taro's volume growth may not pick up going ahead, the compa­ny's performance in its US business is still likely to remain strong over the coming quarters, thanks to revenues from generic Lipodox and those of its newly-acquired businesses of DUSA and URL.

Over the last couple of quarters, Sun has been selling Lipodox in the US at the behest of the drug regulator USFDA to meet the drug shortage in the US. The USFDA has now granted approval to Li­podox, the first generic version of the cancer drug Doxil to Sun Pharma. With a generic approval in place, Sun can con­tinue to ride on the back of the revenues from the sale of this drug, making it part of its base business rather than a one-off item in the books every quarter.

Sun Pharma's strong position in key markets of the US and India has enabled it to maintain a formidable track record. In the US, it has kept building on its business through strategic acquisitions. With a cash pile of Rs.6,500 crore and an enabling resolution to raise Rs.8,000 crore, the com­pany is geared up for further inorganic growth in the region. In India, the compa­ny has managed to maintain its market leadership in key high-margin chronic therapies. For investors in the pharma sector, Sun continues to offer a goodmix of growth along with visibility of earnings. No wonder its stock is still the most valua­ble commanding premium valuations.