Sun Pharma share price closed at Rs 610, up Rs 12 or 2%. Sun Pharma share price moved to Rs 610 from Rs 574 in one week, up over 5% or Rs 36. Sharekhan says that Sun Pharma’s specialty business is on the path to improvement and is expected to gain traction. Two of its existing specialty products - Ilumya and Cequa are witnessing a rise in the prescription numbers and the sales have almost doubled over the past year, attributable to a strong growth in the US, while expansion in Europe and strengthening presence in Japan have also supported the growth. Sharekhan says that the company is working on expanding the geographical presence for the specialty portfolio, which would further drive the growth. Sharekhan has retained Buy recommendation on Sun Pharma with a price target of Rs 700.

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Sharekhan says that Sun Pharma has a strong new product pipeline in the US with 90 ANDAs and 8 NDAs awaiting approval from the USFDA and is expected to unfold in the near term. This coupled with growth in the base business would drive the US sales higher. The domestic formulations business is on a strong footing backed by sturdy growth in the chronic therapy.

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Sharekhan says that given Sun Pharma’s leadership position in chronics segment which is likely to sustain and the expected pick up in the acute therapy coupled with higher field force productivity and expanding geographical reach and penetration would drive growth in the domestic business and would enable the company to outperform the markets.

Collectively, the US and India constitute around 60% of the company’s overall revenues and a strong growth outlook across both the geographies augurs well from a growth perspective says Sharekhan. On the back of a favorable mix, margins are expected to expand and result in a CAGR of 23% over FY20-FY23E in PAT for Sun Pharma.

Sun Pharma Key Risks:

1)      Regulatory compliance risk including delay in product approvals
2)      Currency risk