Sunpharma vs Cipla 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.

Cipla delivered a strong Q1 FY24 with 18% YoY revenue growth to INR 6,329 crore, driven by record performance in India (12% growth) and the US ($222 million, +43% YoY). EBITDA margin expanded to 23.6%, aided by favorable mix and operational efficiencies. PAT stood at INR 996 crore (15.7% of sales). The US complex portfolio, including Lanreotide (18% market share) and stabilized Albuterol, powered growth, while India's chronic share rose to 60%. Management raised full-year EBITDA margin guidance to ~23% (from 22% earlier). Key pipeline catalysts include Symbicort filing by year-end, 4-5 peptide launches over two years, and de-risking of Advair and Abraxane. Risks include US FDA classification for Indore facility and potential pricing pressure in the US generics market.

Guidance read

Full-year EBITDA margin target of ~23%: Management raised FY24 EBITDA margin guidance to approximately 23%, up from earlier 22% guidance, driven by strong Q1 performance and confidence across markets. Symbicort filing by end of FY24: Cipla expects to file generic Symbicort (respiratory product) by the end of calendar year 2023. 4-5 peptide launches in next two years: Cipla plans to launch 4-5 peptide products over the next two years, with a couple of new peptide filings in the same period. Advair launch within 12 months via de-risking: Generic Advair is being transferred to an in-house facility; launch expected within 12 months with no incremental generic competition anticipated.

Risk read

Key risks include US FDA classification for Indore facility pending — Cipla awaits US FDA classification for its Indore facility, which was audited in February 2023. This could impact approvals for key products like generic Advair.; Albuterol recall and market share loss — Cipla faced an Albuterol recall in Q1 and experienced a market share decline in Q4 FY23, though management states share has stabilized.; Potential pricing pressure in US generics — While price erosion has eased, management noted it could revert to higher levels in later quarters, impacting US revenue sustainability.; Goa facility re-inspection uncertainty — Cipla's Goa facility is under remediation and expects re-inspection in H2 FY24. Any adverse outcome could disrupt supply of key products..

Promise ledger

Scorecard data is being built as historical quarters are processed.