Sun Pharma will expand its specialty business through mergers and acquisitions

Sun Pharma, India’s largest drugmaker, plans to expand its specialty business by acquiring other companies and licensing new products, according to a senior executive.

Prudent growth strategy

“We have always taken a cautious approach to mergers and acquisitions, using them to fill gaps in our portfolio and achieve our strategic goals,” said Abhay Gandhi, CEO of Sun Pharma’s North America Business.

Strong financial position for the transaction

“With almost $2.4 billion in cash, including Taro funds, we have the ability to pursue mid- to large-sized transactions,” Gandhi added.

A combination of internal development and acquisitions

In recent years, Sun Pharma has focused on in-house product development and plans to continue to combine internal development with acquisitions.

Financial strength from the Taro merger

As of March 31, Sun Pharma had net cash reserves of $2.4 billion, of which $1.3 billion was from Taro Pharmaceutical Industries, which is debt-free.

Using Taro resources for development

Sun Pharma plans to delist Taro and merge it with the stock exchange, which will enable it to use Taro’s cash for further development.

Strategic acquisitions and licensing

Sun Pharma owns 78.48% of New York Stock Exchange listed Taro and is purchasing the remaining 21.52% for Rs 2,891.7 crore.

Focus on specialty drugs

Specialty drugs target serious, chronic and rare diseases and often require innovative delivery methods, making them harder to copy and more cost-effective due to patent protection.

Key acquisition: Concert Pharma

Last year, Sun Pharma paid Rs 4,600 crore to acquire US-based Concert Pharma, thereby acquiring the rights to Deuruxolitinib, a drug for moderate to severe alopecia areata, a disease that causes baldness. There are few treatment options for this disease.

Investments in specialized drugs

Specialty drugs require significant investment in development, regulatory approval, marketing, distribution, and sales efforts.

Building a specialized business

Over the years, Sun Pharma has built its specialized business through various licensing agreements and acquisitions.

A milestone in specialist sales

In FY24, Sun Pharma’s global specialty business, driven primarily by U.S. sales, exceeded $1 billion in revenue.

Strong growth in the specialist segment

Specialty sales accounted for approximately 18% of Sun Pharma’s total revenue, up 19% year-on-year to $1.04 billion in FY24.

Success with Ilumya

Among specialty products, Ilumya (tildrakizumab), for the treatment of moderate to severe plaque psoriasis, generated sales of $580 million, up 21.7% year-over-year in fiscal 2024.