Sunpharma vs Apollohosp Q1 FY24

Sun Pharma reported Q1 FY24 consolidated revenue of INR 11,785 crore, up 10.7% YoY, driven by US specialty growth (up 21% to $232M) and episodic lenalidomide sales. EBITDA grew 14.7% to INR 3,308 crore, with margins at 27.8%. India formulation sales grew 5.1% to INR 3,560 crore, impacted by NLEM and sitagliptin patent expiry. US generic sales rose 12% to $471M, but Mohali supplies remain suspended. Specialty pipeline advanced: GLP-1 agonist GL0034 showed promising Phase I data; ILUMYA Phase III for psoriatic arthritis accelerated; deuruxolitinib 8mg continues as planned. R&D spend was INR 680 crore (5.8% of sales). Management expects India growth to align with market in coming quarters. Key risk: Mohali plant restart timeline remains uncertain, potentially impacting US generic revenue.

Guidance read

R&D spend guidance maintained at ~6-7% of sales for FY24: Management reiterated full-year R&D guidance, with potential updates if needed. Concert Pharma costs are included. India business to grow in line with or better than market in coming quarters: CEO Kirti Ganorkar expressed confidence that India formulation growth will align with IPM growth, recovering from NLEM and sitagliptin impacts. Lenalidomide sales expected to remain episodic: CFO noted that lenalidomide sales were significant in Q1 but will be episodic going forward, not a steady revenue stream. Deuruxolitinib 8mg filing on track; no slowdown in OLE studies: Management confirmed that the partial clinical hold on 12mg has been lifted, and 8mg dosing continues as planned with no delays.

Risk read

Key risks include Mohali plant supply suspension continues — Supplies from Mohali have not resumed; residual inventory sales are declining. Market share loss may be permanent depending on competition and contracts.; India market share decline and NLEM impact — India market share fell to 8.33% from 8.5% due to NLEM price cuts and sitagliptin patent expiry. Recovery timeline uncertain.; Taro acquisition uncertainty — Management provided no update on the Taro minority buyout beyond forming a special committee. Strategic benefits remain unclear.; Specialty R&D pipeline execution risk — Multiple Phase II/III trials (ILUMYA PsA, deuruxo, GLP-1) require significant investment. Failure or delay could impact returns..

Promise ledger

Scorecard data is being built as historical quarters are processed.

Apollo Hospitals reported a solid Q1 FY24 with consolidated revenue of INR 4,418 crore (+16% YoY) and EBITDA of INR 509 crore (+4% YoY). Healthcare services grew 13% YoY, driven by a 6% increase in IP volumes and an 11% ARPOB improvement to INR 57,760. Insurance revenue mix improved to 44% of IP revenues. The pharmacy distribution business grew 24% YoY, while Apollo 24|7 GMV surged 189% YoY to INR 623 crore, with operating losses narrowing to INR 57 crore. Management reiterated guidance for Apollo 24|7 to achieve operational breakeven by Q4 FY24 and for combined pharmacy to reach INR 10,000 crore revenue with 6% EBITDA margins. Key risks include slower-than-expected occupancy ramp-up in new hospitals and margin pressure from investments in clinical talent and marketing.

Guidance read

Apollo 24|7 operational breakeven by Q4 FY24: Management reiterated that Apollo 24|7 is on track to achieve operational breakeven in Q4 FY24, with EBITDA loss narrowing to INR 57 crore in Q1. Combined pharmacy revenue target of INR 10,000 crore with 6% EBITDA margin: Management guided for combined pharmacy (offline + online) to reach INR 10,000 crore revenue and 6% EBITDA margins, with 500-600 new store additions planned for FY24. Occupancy target of 70% without additional CapEx: Management expects to reach 70% occupancy over time without requiring significant capital expenditure, leveraging existing capacity. Discount rationalization to 13-14% range for online pharmacy: Management guided that online pharmacy discounts will remain in the 13-14% range for the rest of FY24, with offline discounts at 12-12.5%.

Risk read

Key risks include Occupancy ramp-up slower than expected — Overall occupancy at 62% remains below the 70% target, with new hospitals at 60% and some regions like Tamil Nadu seeing muted volumes due to seasonal factors.; Margin pressure from new store additions and clinical investments — Combined pharmacy EBITDA margins are under pressure due to 20% of stores yet to reach breakeven, and new hospitals face margin drag from doctor hiring and marketing costs.; Apollo 24|7 GMV growth may be impacted by discount reduction — The decision to reduce discounts and filter low-value orders led to a sequential decline in pharmacy GMV, and achieving the INR 3,000 crore GMV target may be challenging.; Indraprastha Medical lease renewal uncertainty — Management deferred providing an update on the lease renewal for Indraprastha Medical, which could impact future operations and expansion plans..

Promise ledger

Scorecard data is being built as historical quarters are processed.