Sun Pharma bullish on specialty business, looks to expand the segment to new geographies

Drug major Sun Pharma is looking to expand its specialty business across different regions like Greater China and Japan after having established presence in the US market, as per the company's Annual Report for 2019-20.

Sharing information with shareholders, Sun Pharmaceutical Industries Managing Director Dilip Shanghvi said the company's strategy of developing the specialty business as an additional growth engine has started delivering results, with a gradual ramp up in specialty revenues.

"We expect this momentum to continue over the next few years, although the Covid-19 pandemic and lockdowns may throw up some uncertainties in the near-term," he added.

Specialty medicines are used in the treatment of chronic, complex or rare diseases, which require advanced research and innovation.

Oncology, autoimmune diseases and immunology are the main segments in the space, and will likely remain the key growth drivers in the 2019-2024 period.

The Mumbai-based company's global specialty revenue for 2019-20 stood at around $430 million (about Rs 3,200 crore) and accounted for around 9 per cent of its consolidated revenue, which stood at Rs 323 billion.

Shanghvi said the specialty business is also helping the company to move up the pharmaceutical value chain and bring in more innovation to its business.

"We have invested significant resources over the past few years in building this business and are now focusing on commercial execution to ensure that future cash flows justify these significant investments," he noted.

During the last fiscal, the company launched four specialty products in the US market and is now targeting new markets like Japan and China for business growth.

In June 2019, it announced licensing agreements with a subsidiary of China Medical System Holdings Ltd (CMS) for development and commercialisation of two specialty products for treatment of psoriasis and eye disease.

These licensing agreements will facilitate Sun Pharma's entry into the Greater China market, which is the second largest pharmaceutical market globally, Shanghvi said.

Last year, the company also announced the filing of an application in Japan for manufacturing and marketing authorisation of Ilumya for moderate-to-severe psoriasis with the Pharmaceuticals and Medical Devices Agency (PMDA), Japan.

The PMDA has recently approved this application and launch preparations have been initiated, Shanghvi said.

The launch in Japan will be a step forward for Sun Pharma in expanding the global franchise for Ilumya, he added.

"We have also recently entered into an exclusive licensing and distribution agreement with Hikma Pharmaceuticals PLC for commercialisation of Ilumya in the Middle East and North Africa (MENA) region," Shanghvi said.

Sun pharma, which invested around Rs 20 billion on its R&D activities last fiscal, expects growth trend in the specialty business segment to continue as more products are developed and commercialised for unmet medical needs.

They are likely to account for 40 per cent of global pharmaceutical spending by 2024, with the fastest growth expected to be in the developed markets, where the contribution of specialty products is likely to cross 50 per cent by 2024, the drug major said.

Commenting on other segments, Shanghvi said the company's strong positioning in the global generics industry and continued investments for the future will ensure that it remains a prominent player in this space.

On the business outlook, he added, "Despite our proactive Covid-19 risk response initiative, we do estimate some softening of sales in the near term due to the lockdowns and economic slowdown across various countries, although it is difficult to quantify the impact as of now."

The company's endeavour will be to ensure that it is the least impacted, Shanghvi noted.