Sun Pharma’s track record of delivering consistent and robust growth while maintaining strong profitability and return ratios makes it the best Indian play in the generic space.
With 98 abbreviated new drug applications (ANDAs) pending USFDA approval and a filing rate of 30+ ANDAs per year, Sun Pharma has one of the strongest product pipelines for the US market. The company is amongst the top three players in around 15 of the 25 products that it sells in the US market.
With a strong focus on the chronic lifestyle diseases, Sun Pharma’s domestic formulations business has been outperforming the industry growth by a wide margin. Sun Pharma maintains the numero uno ranking with neurologists, cardiologists, diabetologists and orthopedics.
The company is an aggressive participant in the Para IV patent challenge space. Having already monetized three of its Para IV wins (oxcarbazepine, pantoprazole and amifostine), approvals and launch of generic Effexor XR and clarity on Taro acquisition would act as triggers for the stock.
The stock is quoting at 17.7x FY2009E earnings and at 17.6x FY2010E earnings. We recommend a BUY in the counter for a target price of Rs1,640.