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Sun Pharma CFO on what led to the growth in Indian and US businesses


“We are not giving any margin guidance but if you look at the last four-five quarters of EBITDA margins, we are trying to trend and maintain around 25% plus,” says CS Muralidharan, Group CFO,


Both your India as well as US business have shown a decent growth in the quarter gone by on a Q-o-Q basis. What exactly aided the performance for both of these businesses?
India business recorded a stellar growth of 26% year on year in the quarter. This growth was witnessed across the segments. It is driven by a combination of various factors; improved demand for non-Covid treatments, growth driven across acute, chronic and semi-chronic segments coupled with peak monsoon season also leading to high demand for anti-infectives, cough and cold medications. This strongly reflects our brand equity and overall contribution across these segments which have led to this growth as far as India business is concerned.

As far as the US business is concerned, it has grown year on year. The speciality business and the generic business have also performed well. Overall the growth is driven by a combination of new launches and better supply chain management in the US business.


Will the speciality business continue to drive growth going forward?
We have seen traction in the speciality business and every quarter we are seeing positive momentum. It has grown both year on year and quarter on quarter and we have seen growth in other specialty products also in the current quarter. However, Q2 was a somewhat soft quarter for the dermatology segment in the US and more importantly we are also seeing some surge in Covid cases in the US in the current quarter. So keeping these uncertainties in mind, barring that, we expect to gain momentum and continue our focus in building the prescriptions for our core speciality products.

Let us talk about your margins. They were strong in the quarter gone by, but do you think they will sustain going ahead given the R&D cost levers? They are likely to inch up in coming quarters. What is your outlook for the margins going ahead?
There was spillover of some clinical studies to subsequent quarters that saw reduction in R&D. However, the margins are concerned one. It is driven by a strong topline growth across all geographies and markets coupled with focus on cost and efficiency in operations that have led to the expansion of overall margins.

However, during these uncertain times, we are not giving any guidance. But if you look at the last four-five quarters of EBITDA margins, we are trying to trend and maintain around 25% plus and our efforts will continue. We also said in the past that the expenses will inch up as we see normalisation of operations happening across various geographies. However, we said in our earnings call that as and when the full normalisation occurs, we do not expect the expense levels to go and reach the pre-Covid levels. We would like to maintain and find ways and ways of improving the margins to the efficiency and higher growth in our key focussed markets.

Speciality business is gaining and you have been investing in speciality business. Has it started to pay a dividend from now on?
We have been maintaining specialty sales growth and that continues to be our focus. We are trying to build the portfolio. Some other products are also in various phases of clinical trials. So we are in the investment phase. Some of the products are also gaining momentum and as and when each of those products achieve the peak sales, we will see continuous improvement in the overall performance of the specialty business which will reflect in overall group results.

In your India business, most of your therapies have seen high growth. Could you fill us in with more details on that particular end?
As I said, the growth is broad-based across most of the segments in which we participate in the market. In fact, the demand for non Covid treatments has given the growth. We have a strong presence in both acute, chronic and semi chronic and all contributed to the significant growth in India business and the market also performed well.

Our aim is to try and do much better than the market in India and then we have added field posts a year back. That has also started slowly contributing to overall improvement in the top line.

Can you talk about the pricing pressure in the US business? Has the supply resumed there?
As far as the US generic market is concerned, we like to maintain that the country is still highly competitive. Pricing in the US generic market is always very product specific and so it will be very difficult to give any particular guidance or a single number for price erosion. What we continue to focus on is making high quality products available at the right place at the right time and that is one of the things we shared yesterday.

Effective supply chain management has really helped us to do well in the generic space.

Do you anticipate physical USFDA inspections of plants will start anytime soon?
On account of the global pandemic and the travel restrictions, plant inspections not only for Sun Pharma but for many other pharma companies have been delayed. However, in the case of Sun Pharma, we are awaiting further notice from the FDA for re-inspection and as and when the things normalise, we expect the regulators to have a physical inspection of various sites in other pharmaceutical companies.

What do you think about the Indian pharma export, will this increase in the post pandemic world?
Not only India, globally various countries will have to go back to the drawing board and look at their healthcare infrastructure and the healthcare budget. That has come up very clearly and consciously as many of the governments start looking at the healthcare infrastructure and healthcare budget that should in turn help in improving the overall healthcare availability, access and reach to the various patients available across the globe. In turn, various pharmaceutical companies will put their best foot forward to make the products available in the various markets so that we are able to meet the unmet needs.



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