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Specialty Boost For Sun Pharma Amid Generics Woes

This in an important milestone for Sun Pharma as its generic launches face pricing pressure in its key market.

Employees service a machine at a medical research unit. (Photographer: Dhiraj Singh/Bloomberg)
Employees service a machine at a medical research unit. (Photographer: Dhiraj Singh/Bloomberg)

Sun Pharmaceuticals Ltd. today won an approval from the U.S. drug regulator for its specialty drug even as India’s largest drugmaker continues to face high competition in its core generics business in its largest market.

The U.S. Food and Drug Administration approved the high-margin branded Ilumya, commonly known as tildrakizumab, used for treatment of moderate-to-severe plaque psoriasis, a skin condition. Sun Pharma had in-licensed the drug from Merck in September 2014 for an upfront cost of $80 million. Merck will manufacture it and Sun Pharma will pay milestones and royalties.

The market for psoriasis treatment is worth $6 billion in the U.S. and is growing in single digit. Sun Pharma’s is the ninth biologic to be launched for treatments. It’s an important milestone for the Indian company as its generic launches face pricing pressure in its key market. What is now important for Sun Pharma is to ramp up its speciality business to offset the challenges.

Ilumya can generate $200 million annually in revenue in the fifth year, Deepak Malik, a pharma analyst at Edelweiss, wrote in a note to clients. Sun Pharma is quite late in the crowded market and unless company offers attractive price, it will be difficult to make a mark, he said.

IDFC Securities expects revenues of $25 million and $125 million over the financial year 2018-19 and FY20 with peak sales of about $500 million by the fifth or sixth year of launch. “Ilumya will face tough competition from companies like Novartis, Eli Lilly and Johnson & Johnson who have competing and well established.” the brokerage said in its note, but added that the growing market which offers opportunities for all players.

Sun Pharma gave Merck $80 million for the two pivotal clinical trials and then spent another $250 million itself in developing the drug. In May 2016, Sun Pharma announced positive top-line data for Phase III trials. This was followed by presenting the fine print of clinical data at the 25th European Academy of Dermatology and Venereology Congress in Vienna, Austria in October that year. That paved the way for the approval.

Nomura, in a pre-launch note, expected peak sales at $200-450 million, implying 2-4 penetration by 2023. With relatively low efficacy profile, the brokerage said, Sun Pharma’s market share will be less than 5 percent.