Sunpharma vs Cipla Q4 FY24

Sun Pharma reported Q4 FY24 consolidated revenue of INR 11,813 crore, up 10.1% YoY, driven by strong specialty sales (Ilumya up 21.7% to $580M globally) and India formulation growth of 10.2%. EBITDA margin contracted 30bps to 25.3% due to higher R&D and selling expenses. PAT grew 33.8% to INR 2,655 crore, aided by lower tax. Management guided for high single-digit revenue growth in FY25, with R&D spend rising to 8-10% of sales as the company invests in specialty pipeline (deuruxolitinib launch, phase III for MM2). Key risks include FDA compliance issues at Mohali/Dadra, potential pricing pressure from Stelara biosimilars, and elevated investment costs impacting near-term margins.

Guidance read

High single-digit consolidated revenue growth for FY25: Management expects consolidated top-line growth in high single digits for FY2025, driven by all business segments. R&D spend to be 8-10% of sales in FY25: R&D investments will increase to 8-10% of sales for the next year, primarily for specialty pipeline. Deuruxolitinib launch post-PDUFA date (July 2024): Deuruxolitinib is on track for launch after the July 2024 PDUFA date, with pre-launch costs already being incurred.

Risk read

Key risks include FDA compliance issues at Mohali and Dadra plants — OAI status and 483 observations at Mohali and Dadra facilities could impact US generic launches and revenue.; Elevated R&D and launch costs pressuring margins — Higher R&D spend (8-10% of sales) and deuruxolitinib launch costs may compress EBITDA margins in FY25.; Pricing pressure from Stelara biosimilars — Stelara biosimilar entry next year could impact Ilumya pricing and market share in the US psoriasis market.; Currency depreciation in emerging markets — Nigeria forex loss and broader emerging market currency volatility could impact reported revenue and profitability..

Promise ledger

Of 2 tracked promises, management 0 met, 1 close, 1 missed.

Cipla reported Q4 FY24 revenue of INR 6,163 crore, up 10% YoY, with EBITDA margin expanding 95 bps to 21.4%. Full-year revenue hit a record INR 25,455 crore (+14% YoY) and PAT stood at INR 4,106 crore (16% margin). Growth was driven by One India crossing INR 10,000 crore, North America reaching $906 million (+24% YoY), and South Africa leading prescription market share. Key drivers included branded prescription growth (10% YoY), lanreotide market share of 20.8%, and albuterol share rising to 15.5% in April. Management guided FY25 EBITDA margin of 24.5%-25.5% (up to 100 bps expansion) and capex of INR 1,500 crore. Risks include USFDA observations at Patalganga and Kurkumbh facilities, potential disruption from trade generics channel restructuring, and timing uncertainty for Goa plant reinspection and Abraxane launch.

Guidance read

FY25 EBITDA margin guidance of 24.5%-25.5%: Management expects EBITDA margin expansion of up to 100 bps over FY24's 24.5%, driven by cost measures and portfolio mix. Capex of INR 1,500 crore in FY25: Capital investments planned to enhance manufacturing capability and sustainability. North America revenue growth aspiration for FY25: Aim to grow top line YoY, backed by commercial execution of existing portfolio and new launches. Launch of 4 peptide assets in FY25: Targeting to launch four peptide assets during the fiscal year.

Risk read

Key risks include USFDA observations at Patalganga and Kurkumbh facilities — Patalganga received six 483 observations and Kurkumbh one; official classification awaited, potentially delaying product approvals.; Trade generics channel restructuring disruption — Transition to direct stockist model may cause temporary hiccups in Q1 FY25, impacting trade generics growth.; Timing uncertainty for Goa plant reinspection and Abraxane launch — Goa plant reinspection expected around July-August 2024; Abraxane launch depends on inspection outcome and subsequent 90-day process.; Potential pricing pressure in Lanreotide market — As a two-player market, pricing may vary depending on competitor actions, though management aims to grow total value..

Promise ledger

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