Sun Pharma falls 3% as Shanghvi sees single digit decline in FY18 revenue

Sun Pharmaceutical Industries share price fell 3.4 percent intraday Wednesday after tepid outlook from the management for current financial year 2017-18.

"Growth could be a challenge in FY18 and we expect a single-digit decline in consolidated revenues for FY18 over FY17," founder Dilip Shanghvi said while addressing 25th Annual General Meeting on September 26.

The US generics industry is facing rapidly changing market dynamics. Increased competitive intensity and strong customer consolidation is leading to pressure on pricing, he reasoned.

Continued delay in approvals from the Halol facility is also impacting Sun Pharma, he said.

The pharma major is eagerly awaiting the re-inspection of Halol facility by the US Food and Drug Administration, after completion of remedial activities.

In November 2016, the Halol facility underwent a re-inspection by the USFDA resulting in nine new Form-483 observations. The company has filed its response to these observations within the stipulated time and has also implemented the remedial steps required to address these observations.

Meanwhile, the company increased its focus on the specialty business that can help it transition up the value chain, he said, adding this segment currently does not generate revenues commensurate to investments.

It has significantly enhanced global specialty pipeline through acquisitions and partnerships as well as made substantial progress in successfully completing clinical trials for key products.

"Overall, we now have four commercialized specialty products in the US market, i.e., Absorica, Kerastick, Odomzo and BromSite. We have already filed Tildrakizumab with USFDA and the European Medicines Agency. The product is now awaiting regulatory approvals both in the US and Europe," he detailed.

The company also plans to file the NDA for Seciera with the US FDA over the next few months.

The approval for two other specialty products – Xelpros and Elepsia – has been delayed due to the current good manufacturing practices issues at Halol facility, Shanghvi said.

Hence the company is in the process of shifting these two products to alternate sites, he added.

He said the integration of Ranbaxy into Sun Pharma was on track. "Approximately 2/3rd of the targeted synergy benefits have been achieved in FY17 and we are confident of achieving USD 300 million mark in FY18. These synergy benefits have helped us fund our specialty initiatives," he explained.

At 12:11 hours IST, the stock price was quoting at Rs 493.80, down Rs 13.65, or 2.69 percent on the BSE.