Sunpharma vs Cipla Q2 FY24

Sun Pharma reported Q2 FY24 consolidated revenue of INR 12,003 crore, up 11% YoY, driven by India formulations (11.1% growth) and global specialty sales (19.3% growth to $240M). EBITDA margin contracted 90bps YoY to 26.1% due to higher R&D and selling expenses. PAT grew 5% YoY to INR 2,376 crore. US sales grew 4.2% to $430M, supported by specialty products Ilumya, Cequa, and Winlevi, but offset by Halol/Mohali plant issues and lower Revlimid contribution. Management highlighted strong prescription trends and market share gains in specialty, but provided no specific FY24 guidance. Risks include Halol remediation timeline uncertainty, Taro's Israel operations exposure, and potential pricing pressure in US generics.

Guidance read

R&D spend guidance maintained: Management expects R&D expenses to remain at similar levels or increase due to clinical trial ramp-up. India business to grow higher than market: Management aims to grow India formulation business faster than the Indian pharmaceutical market on an annualized basis. Tax rate to inch up on annual basis: Tax rate expected to be higher than last year's 8.8% due to profit mix across jurisdictions.

Risk read

Key risks include Halol plant remediation uncertainty — Halol plant remains under FDA scrutiny; no timeline for re-inspection or resolution, impacting US generic supply.; Taro Israel operations exposure — Taro's operations in Israel may be impacted by regional conflict, though management says business continuity is maintained.; US generic pricing pressure — Management sees no significant improvement in generic pricing environment; pricing remains product-specific and competitive..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.

Cipla delivered a record quarter with revenue of ₹6,678 crore (+15% YoY) and EBITDA margin of 26%, driven by double-digit growth across India (+10%), North America (+28% to $229M), and South Africa (+12%). The India business benefited from a chronic mix shift (+140bps to 60%), while US growth was led by lanreotide (20% share) and albuterol share recovery. EBITDA guidance was raised to 23-24% (bias to higher end). Key upcoming catalysts include generic Symbicort filing in Q3, a peptide launch in Q4, and multiple complex filings in FY25. Risk: Indore facility OAI classification could delay US approvals.

Guidance read

EBITDA margin guidance raised to 23-24% for FY24: Management increased full-year EBITDA margin guidance from 23% to 23-24%, with bias towards the higher end. Generic Symbicort filing in Q3 FY24: Cipla plans to file generic Symbicort in Q3 FY24, having completed clinical studies. Peptide product launch in Q4 FY24: One peptide product launch planned in Q4 FY24, with 3-4 more in FY25. US revenue sustainable range of $220-225M next quarter: Management guided US revenue of $220-225M as sustainable for the next quarter.

Risk read

Key risks include Indore facility OAI classification — Indore facility received OAI from US FDA; corrective measures are ongoing but may delay US approvals.; Albuterol market share volatility — Albuterol share is dependent on which variant the market buys; recovery to prior highs is not fully in Cipla's control.; Revlimid volume uncertainty post-12-month period — Analyst questioned Revlimid volume trajectory after the initial 12-month period; management gave no specific guidance..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.