Sun Pharma's acquisition of Concert adds a complementary derma product to the existing specialty portfolio, said global brokerage Jefferies. The grug major has completed the acquisition of US-based Concert Pharmaceuticals. In January, the Mumbai-based company inked a pact to acquire Concert in a $ 576 million deal.
“An unmet medical need, strong efficacy vs competing drugs and leveraging existing infrastructure should result in peak global sales of $850 m by 2031 translating into pre-tax NPV of INR64/share. Incremental R&D spend is unlikely to be a major drag on FY24-25 profitability,” the note stated.
Jefferies has maintained BUY rating on Sun Pharma shares with a target price of ₹1,200 apiece and has recommended as top pick. Though, its sees ongoing litigation with Incyte on patents as a key hurdle.
“We remain constructive on Sun's specialty strategy and its strong India positioning. We await filing of the product before incorporating the Concert acquisition into our estimates,” it added.
The acquisition gives Sun Pharma global rights for lead candidate Deuruxolitinib being developed for the treatment of Alopecia Areata, an autoimmune dermatological disease. The product has completed Phase III trials and is expected by the company to be filed with the US FDA in 1HCY23.
“Given the unmet medical need and a strong efficacy profile, Sun’s competitive positioning is expected to be strong. We expect Sun to leverage its existing field force to market this product and incremental spend will largely be towards promotion of the product. We forecast that Deuruxolitinib can achieve sales of $765 m in the US + EU market by 2031. We estimate R&D spend of $100 m over the next two years for OLE studies and its impact on FY25 Ebitda is ~3% which should be offset by the recent approval of gRevlimid in the US,” Jefferies added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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