Hold Sun Pharma; target of Rs 775: Emkay Global Financial

Emkay Global Financial's report on Sun Pharma

We believe that the recent run-up in Sun Pharma stock due to the good traction for the Winlevi launch is an over-reaction to a typical launch strategy of having a Patient Assistance Program (PAP). A careful analysis of Winlevi prescriptions (Rx) suggests that two-thirds of the Rx come via the PAP. The company is offering a coupon card that limits out-of-pocket (OOP) cost for patients to as low as ~US$25/month. The patient can use the card for as long as 12 months, with total benefits of US$7,231 for 14 tubes. Based on this, we believe the revenue realization for PAP Rx would be very low. PAP is a typical launch strategy used by pharma companies to garner insurance (formulary) coverage. However, literature indicates PAPs rarely drive higher insurance coverage. This is something we have already witnessed with multiple drugs (e.g., Absorica). Hence, we believe total Rx, excluding PAP Rx, is a true reflection of the underlying demand, and we will monitor it to assess Winlevi's potential.

Outlook

For now, we maintain our below-Street expectation for Winlevi peak sales at ~US$60mn, based on: 1) Rx trend, excluding PAP, 2) efficacy profile and 3) competitive landscape. We maintain our Hold rating on Sun with a TP of Rs775.