On fundamentals, analysts see good progress in the ramp-up of specialty products. While pricing pressure in the US generics is also stabilising, the specialty products that Sun Pharma
has been investing in are seen as a growth driver of its US business.
In the specialty segment, the management remains confident of sales of its dermatology product Ilumya gaining traction, and is looking to launch it in other geographies. Analysts say the seasonal weakness in dermatology products Levulan and Absorica had offset the benefits from Ilumya ramp-up in the July-September (Q2) quarter, leading to flattish sales in the US specialty sales.
However, the gains from Ilumya sales will be visible, moving forward. The launch of ophthalmic product Cequa in October has also seen encouraging initial response. Analysts at Nomura feel Cequa could ramp up faster than Illumya, given the limited competition in the space. Those at Centrum Broking say Sun’s oncology product (Odomzo), too, continues to expand market share and gain traction.
The domestic business is another strong growth driver. In Q2, a 35 per cent year-on-year (YoY) growth in domestic sales (32 per cent of overall revenues) helped consolidate sales growth at 16 per cent YoY. Even sales in the rest-of-the-world markets (about 14 per cent of revenue) grew 49 per cent YoY, driven by organic initiatives and consolidation of acquisition of Pola Pharma in Japan.
Analysts at JPMorgan see China and Japan as meaningful future opportunities. Sun Pharma
also remains among the top ‘buy’ ideas for CLSA.