Sun Pharma Wins U.S. FDA Approval For Anti-Fungal Injection — Analyst Take
Sun Pharmaceutical Industries Ltd.’s generic anti-fungal injection is an important drug for treating post-Covid complications and will face limited competition in the U.S., according to at least two analysts.
One of India’s largest drugmaker’s wholly owned subsidiaries received the final approval from the U.S. Food and Drug Administration for its abbreviated new drug application for a copycat version of AmBisome Liposome for injection (50 mg/vial), a registered trademark of Gilead Sciences, Inc., according to an exchange filing on Dec. 15.
“Sun Pharma has been granted competitive generic therapy designation by the FDA and being the first approved generic, is eligible for 180 days of CGT exclusivity for the product.”
The shot will be used to treat fungal infections such as those of the lining of the spinal cord and brain and parasitic disease usually affecting spleen, liver, and bone marrow in certain people.
The reference drug, the filing said citing October 2021 IQVIA health data, had annualised sales of about $136 million (about Rs 1,037 crore) in the U.S.
Morgan Stanley estimates that Sun Pharma could generate $20-25 million (Rs 150-190 crore) sales on a 12-month basis. Phillip Capital pegs incremental sales at $30 million (around Rs 230 crore); $23 million (Rs 175 crore) during exclusivity and after-tax profits of $14 million (Rs 107 crore) in FY23, implying 1.2% incremental earnings.
The U.S. contributed 28% to Sun Pharma’s revenue in the quarter ended September.
Shares of Sun Pharma, however, fell 1.61%, the steepest intraday decline in eight sessions, to Rs 762.6 apiece as of 10:30 a.m. on Thursday. The stock’s trading volume was 2.3 times the 30-day average volume for this time of the day.
Of the 40 analysts tracking the company, 35 maintain a ‘buy’, two recommend a ‘hold’ and three suggest a ‘sell’, according to Bloomberg data. The 12-month consensus price target implies an upside of 20.3%.
What brokerages have to say about Sun Pharma...
Recommends ‘overweight’ with a target price of Rs 895 apiece, implying an upside of 15% from the previous closing.
Sun Pharma’s announcement of the U.S. FDA approval for gAmBisome Liposome for injection, 50 mg/vial has been granted competitive generic therapy designation by the regulator, making it eligible for 180 days of CGT exclusivity for the product.
Although there is no generic for this liposomal injection of amphotericin, several generics are available for other forms.
Given technical complexity and a small target market, it expects this to remain a low-competition product in the medium term.
Ramp-up of Ilumya (treat moderate to severe plaque psoriasis) and Cequa (chronic dry eye); and Winlevi (acne) launch.
Domestic growth accelerating.
Value-accretive mergers and acquisitions.
Pricing pressure increasing in the U.S.; slowdown in the domestic market.
Ilumya’s early access programme becoming prolonged and cost increases from direct-to-consumer marketing.
Corporate governance issues intensifying.
Halol official action initiated being extended to warning letter.
Covid-19 related setbacks.
Recommends ‘buy' with a target price of Rs 1,000 apiece, implying an upside of 29% from Dec. 15 closing.
Amphotericin B liposomal is an antifungal medicine that is used to treat serious, life-threatening fungal infections such as mucormycosis, etc. and could be an important drug in the post-Covid complications.
The drug approval is timely development considering Covid.
The brokerage remains positive on Sun Pharma driven by—
1) Its specialty-led profitable growth in the U.S.;
2) Strong growth in domestic market with profit leadership;
3) Bottoming out of Taro (U.S. subsidiary).