Pharma Giant Faces Regulatory Concerns Following USFDA Inspection Results
Sun Pharmaceutical Industries witnessed a 3% decline in its share price, slipping to Rs 1,559.45 during Friday’s trading session on the Bombay Stock Exchange (BSE), subsequent to the US Food and Drug Administration (USFDA) categorizing its Dadra facility as Official Action Indicated (OAI). The OAI status suggests that regulatory or administrative actions are recommended.
The USFDA conducted an inspection at Sun Pharma’s Dadra facility from December 4, 2023, to December 15, 2023, as disclosed in an exchange filing by the company. Following the inspection, the regulatory body determined the classification status of the facility as OAI.
As of 09:34 am, Sun Pharma shares were trading at Rs 1,581.10, marking a 1.5% decrease compared to the previous session, while the S&P BSE Sensex experienced a minor decline of 0.12%.
Despite this setback, Sun Pharma has showcased resilience in the current calendar year 2024, outperforming the market with a surge of 26%, compared to the benchmark index’s 3.6% rise. The stock reached a record high of Rs 1,638.70 on April 5, 2024, underscoring its market strength.
Analysts at Incred Research Services anticipate some moderation in Sun Pharma’s US generics and Taro business segments, as indicated by secondary data. They also expect a marginal decline in the specialty business post a robust Q3FY24, attributed to seasonal factors. However, they forecast an 11% year-on-year growth in the company’s India business.
Conversely, analysts at KRChoksey Shares and Securities remain optimistic about Sun Pharma’s global specialty segment, anticipating a sales boost from recent marketing approvals such as Winlevi in Australia. Consequently, they have revised Sun Pharma’s sales and net income estimates to 10.9% and 16.0% CAGR, respectively.
Despite regulatory challenges, Sun Pharma has demonstrated consistent revenue and net income growth, primarily driven by strong performance in the specialty segment. As of Q3FY24, specialty revenue accounted for 19.2% of overall sales, indicating market outperformance and sustained growth momentum.
