Sun Pharma drops 5% after US court halts launch of alopecia treatment drug

Shares of Sun Pharmaceutical Industries declined five per cent to Rs 1,766.15 in early trade on the BSE on Monday following a ruling by the U.S. District Court of New Jersey that temporarily halted the company’s planned launch of Leqselvi, its hair loss treatment drug, in the U.S. The court has issued a preliminary injunction barring the drug’s release until a future ruling or until the contested patent expires, whichever comes sooner. Sun Pharma has announced it will appeal the decision and explore possible out-of-court settlements.

Impact on financial projections and sentiment

Sun Pharma’s Q2 earnings call highlighted contingency plans in the event of legal setbacks, including a potential settlement before the patent expires in December 2026. The delayed launch of Leqselvi could impact projected earnings from this drug, which had a forecasted peak revenue potential of over $200 million four years after launch. Brokerage firm ICICI Securities noted the drug's long-term growth potential but acknowledged some short-term negative sentiment due to the court decision, impacting investor outlook for Sun Pharma shares.

Broader business performance and analyst recommendations

Despite this setback, Sun Pharma’s stock has rallied 43 per cent year-to-date, fueled by growth in speciality drugs, emerging markets, and domestic sales, which have shown strong performance independent of its U.S. generics segment. UBS maintains a "Buy" rating on the stock, with a target price of Rs 2,450, underscoring the appeal of Sun's speciality business and a tiered royalty structure that reduces reliance on generic products. Similarly, JPMorgan remains optimistic about Sun’s speciality portfolio, expecting a 20 per cent compound annual growth rate (CAGR) for its speciality business through FY24-27.