Sun Pharma's Margin Continues To Be Driven By India, Global Specialty Sales, Says CFO

Sun Pharmaceutical Industries Ltd.'s global specialty and India businesses continue to drive the Ebitda margin of 25-26% through the year, Chief Financial Officer CS Muralidharan said on Friday.

Muralidharan did not guide on the future margin but said the pharmaceutical major continued to focus on cost efficiencies.

This is reflective of the fact that Sun Pharma has been able to maintain its margin trajectory despite consolidating expenses from recent acquisitions, he told NDTV Profit.

The global specialty business contributed around 19% of the consolidated revenue in the third quarter from around 7% about three to four years ago, Muralidharan said. It will continually see "an increase in terms of percentage contribution to the overall revenues".

He expects the global specialty business to continue growing in the 20–25% range.

On the India business, the CFO said Sun Pharma's performance—11% growth in the third quarter—was due to volume increases.

This is unlike the Indian pharma market, which reported growth in the quarter only on the back of a price hike. Sun Pharma aims to grow faster than the Indian market, according to Muralidharan.

The company, he said, currently spends 60% of its research & development expenses on global generics and 40% on specialty business, but this ratio will keep growing towards specialty as it continues to invest more in this business.

Sun Pharma targets ending the current financial year at a 7–8% R&D spend on overall revenue, in line with its earlier guidance.

However, the CFO did not commit to any timelines with regards to the resolution or reinspection of its Halol and Mohali plants, which are currently riddled with severe issues related to the US Food and Drug Administration.

Other key points of conversation:

• About the Red Sea turmoil, Muralidharan said the company would ensure continuity of the supply chain to ensure its medicines reach customers but made no comments on any inflated costs of freight and raw materials and their impact.

• There are no comments on how the company plans to utilise the cash balance from Taro Pharmaceutical Industries Ltd. if the acquisition of the minority stake were to receive all approvals.

• While the launch timeline for the company's alopecia drug, deuruxolitinib, was set for July 2024, the company did not comment on the revised revenue opportunity in light of competition.