Stock Market Today- The share price of Sun Pharmaceutical Industries has declined 4-5% in the last two trading sessions on regulatory concerns. The US drug regulator (USFDA) post conducting an inspection at Sun Pharma’s Dadra facility from 4 December 2023 to 15 December 2024 has now determined the inspection classification status of this facility as Official Action Indicated (OAI ).
OAI status means that the USFDA (United States Food and Drug Administration) has found notable deviations from its prescribed Good manufacturing practices or GMP quality standards and USFDA can withhold approval of new products from Dadra until Sun Pharma resolves the issues.
Sun Pharma in its release on Friday said it will work with the regulator to achieve fully compliant status.
Sun Pharma’s ordeal with the US drug regulator continues as its Halol Manufacturing facility in Gujarat is already under USFDA scanner facing an import alert. Its Mohali unit also wields USFDA clearance.
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Limited revenue impact of Dadra units OAI status
Analysts at HSBC Securities and Capital Markets (India) Private Limited, however, now believe there should be limited revenue impact due to Dadra OAI as it contributes less than 2% of Sun’s consolidated revenue, it adds to the regulatory surplus. In the short term, Sun Pharma mainly sees profits accruing to its US generics sales from the sale of a generic of Revlimid, the multiple myeloma drug, However, exclusive of Revlimid, HSBC expects near-term sales of US generics to remain limited at $120-130 million a quarter due to the lack of notable new launches.
Specialty portfolio remains key growth drivers
Sun Pharma has focused on developing and growing its specialty portfolio over the past few years and is regularly increasing sales contributions.
Analysts at HSBC also remain positive on the growth outlook for Sun’s specialty brands (mainly dermatology drugs Ilumya, Winlevi and Cequa eye drops) and foresee a Sana outlook for specialty.
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portfolio, The global specialty sales according to HSBC estimates are likely to contribute around 19% of Sun Pharma’s total revenue by FY26. These contributions are significantly higher compared to 16% in FY23.
Sun’s contribution specialty to US sales is set to rise to a phenomenal 51% of US sales compared to c)43% in FY23, implying a CAGR (compound annual growth rate of 14% for FY24-26 estimated) –
Specialty sales and the consequent increase in Indian formulations should more than offset the challenges in US overall sales, analysts said.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions
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Published: 15 Apr 2024, 17:01 IST