The pricing pressure in the US, the main market for Sun Pharmaceuticals, will dampen its 2019 earnings. Generic drug makers have been facing poor sales in the US for quite some time now due to rising competition and pricing scrutiny. The US accounts for 35% of the total revenue.
Why is this important
Sun Pharmaceuticals is already being bogged down by issues related to clearance for some of its factories due to quality control failures. The firm is trying to get its Halol plant re-certified at the earliest.
The company will now focus on reducing its research spend on some generic drug projects that are unviable. Instead, Sun Pharma will work on speciality drugs and will be launching ‘Yonsa’ for prostate cancer, ‘OTX101’ to treat dry eyes and ‘Ilumya’ for psoriasis.
Stock to be impacted
Sun Pharmaceuticals Ltd. (CMP: Rs 501 Market Capitalisation: Rs 1,20,359 crores FY2020 P/E: 19.04)