Employees enter the Sun Pharmaceutical Industries Ltd. corporate office in the Andheri suburb of Mumbai, India. (Photographer: Amit Madheshiya/Bloomberg).

Sun Pharma Expects India Business To Normalise In 2018-19

Sun Pharmaceuticals Industries Ltd. expects its India business to stabilise in the current fiscal leading to “reasonable volume growth” after disruptions in the previous year due to the implementation of the goods and services tax.

“We expect normalisation of the India business in 2018-19 post the disruption in 2017-18 due to GST implementation. Favourable demographics will ensure reasonable volume growth in India,” Managing Director Dilip Shanghvi said in a message to shareholder’s in the company’s annual report. He, however, added that the government’s enforced price cuts and policy changes are potential risk factors for the business.

The drugmaker’s India business revenue grew 4 percent year-on-year to Rs 8,029 crore in 2017-18.

Shanghvi said the short-term outlook for the U.S. generics market continues to be challenging given the pricing pressures. “We are also expecting reasonable growth in our emerging markets business, however, as always, currency fluctuations continue to be a risk,” he added. Elaborating further, he said the company is in the process of gradually ramping up its global specialty business.

We plan to increase its (global specialty business) contribution to our consolidated revenues in the long term. This will entail significant front-ended investments, with commensurate revenue streams accruing only over a period of time
Dilip Shanghvi, Managing Director, Sun Pharmaceuticals

Some of the company’s specialty products are likely to be commercialised in the U.S. in 2018-19 and hence it expects to incur significant pre-launch and branding costs along with increasing sales force costs, he added. “Given these factors, we expect a low double-digit topline growth in our consolidated revenues for 2018-19 over 2017-18.”

Shanghvi said the company’s consolidated R&D investments for 2018-19 will be about 8-9 per cent of its revenue.