Home / Companies / News /  China is a 'big opportunity' for Sun Pharma, says founder Dilip Shanghvi

Sun Pharmaceutical Industries Ltd. is scouting for a partner in China to help it win a larger piece of the world’s second-largest drug market, where the government is on a mission to drive down the cost of healthcare.

With a recovery underway in its US business, Sun Pharma’s billionaire founder Dilip Shanghvi is homing in on China and believes market watchers are underestimating the potential there for India’s largest drugmaker.

“There is a big opportunity for us," Shanghvi said in an interview with Bloomberg News Editor-in-Chief John Micklethwait in Mumbai on Thursday. “That would create a significant new revenue stream, which is not factored in our valuation when analysts look at it."

China has rolled out an ambitious multi-city bulk drug procurement program that’s driving down prices and providing an opening for Indian manufacturers like Mumbai-based Sun Pharma to compete. The country is importing more drugs, reimbursing for more and speeding up approvals of new medicines to ensure they reach patients faster.

The policy push comes as many generic drugmakers continue to reel from a brutal price war in the US, the world’s biggest drug market. While Sun Pharma’s Indian rivals, like Dr. Reddy’s Laboratories Ltd. and Cipla Ltd., are already expanding in China, Shanghvi has mostly kept quiet about his plans there.

Scaling Up

India’s top drugmaker will start scaling up its China business in six to nine months, according to Shanghvi. The unit is expected to contribute “some percentage" to Sun Pharma’s $4 billion of overall sales within three years, from almost nothing right now, he said.

The $160 billion Chinese drug market “is now a focus for Indian generics" as U.S.-approved drugs are cleared faster, Jefferies analyst Piyush Nahar wrote in a Feb. 27 note.

“While the reforms make China an attractive market, ramp-up and profitability will have significant challenges," Nahar wrote. “Unlike US, distribution is important in China and will need a local partner and higher spend."

Analysts are split on the prospects for Sun Pharma’s shares, which have lagged the rise in the S&P BSE Sensex this year. In the last four years, Sun Pharma has fallen nearly 52 percent compared to the Sensex’s 42 percent climb.

Sun Pharma’s large portfolio of US-approved products should help the drugmaker ramp up its China business with little investment, Shanghvi said.

“We see enormous interest in China for products that we have global rights for," Shanghvi said, adding that the company “would be comfortable making significant financial commitments," there longer term.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed

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