Sun Pharma - Gleevec ends, now Glumetza

protrade

Well-Known Member
#1
On Feb 1st, Sun Pharma launched Gleevec generic in the US - and the 180 day exclusivity period garnered something like $400m in revenues and $300m in profits for Sun Pharma.

That exclusivity period ended on 1st August - and the market has assumed that Gleevec will no longer contribute to Sun Pharma! The reality however, is that while Gleevec price may fall because of greater competition post exclusivity end, more people will shift to generic version. Plus Sun Pharma has a huge margin on the generic, so it is well positioned to lower prices aggressively and capture greater market share. I expect that the actual profits for Sun Pharma from Gleevec will continue at a $150m per quarter run rate.

But Gleevec is not the real story. Literally a day after Gleevec exclusivity ended, the FDA approved Sun Pharma's application for Glumetza. Diabetes is a much bigger market than leukemia, so it is likely that even if there is some slack in Gleevec, it will more than be offset by Glumetza.

Sun Pharma is also in advanced stages of sorting out the issues at Halol, and they should get approval from FDA any time in next couple of months.

This is India's largest pharma company, and is well positioned in US as well as other international markets also. They have a fantastic R&D pipeline, and their success with Gleevec and Glumetza will allow them to augment research dollars, which bodes well for the future.

They have also more or less completed the integration of Ranbaxy, and will reap the benefits of this in a big way going forward.

All said, current weakness in Sun Pharma gives an excellent opportunity to accumulate the stock at a reasonable multiple. Being a defensive play, Pharmaceuticals are good additions to the portfolio if you expect market volatility.

It is also likely that attempts by the US to lower costs of medical care, and to restructure Obamacare will make the playing field more friendly for generics. In any case, this is going to happen one way or the other, and being the largest company in India and the 5th largest in the world, and operating in all important geographies, Sun Pharma is the obvious choice to participate in this space.
 

mastermind007

Well-Known Member
#3
On Feb 1st, Sun Pharma launched Gleevec generic in the US - and the 180 day exclusivity period garnered something like $400m in revenues and $300m in profits for Sun Pharma.

That exclusivity period ended on 1st August - and the market has assumed that Gleevec will no longer contribute to Sun Pharma! The reality however, is that while Gleevec price may fall because of greater competition post exclusivity end, more people will shift to generic version. Plus Sun Pharma has a huge margin on the generic, so it is well positioned to lower prices aggressively and capture greater market share. I expect that the actual profits for Sun Pharma from Gleevec will continue at a $150m per quarter run rate.

But Gleevec is not the real story. Literally a day after Gleevec exclusivity ended, the FDA approved Sun Pharma's application for Glumetza. Diabetes is a much bigger market than leukemia, so it is likely that even if there is some slack in Gleevec, it will more than be offset by Glumetza.

Sun Pharma is also in advanced stages of sorting out the issues at Halol, and they should get approval from FDA any time in next couple of months.

This is India's largest pharma company, and is well positioned in US as well as other international markets also. They have a fantastic R&D pipeline, and their success with Gleevec and Glumetza will allow them to augment research dollars, which bodes well for the future.

They have also more or less completed the integration of Ranbaxy, and will reap the benefits of this in a big way going forward.

All said, current weakness in Sun Pharma gives an excellent opportunity to accumulate the stock at a reasonable multiple. Being a defensive play, Pharmaceuticals are good additions to the portfolio if you expect market volatility.

It is also likely that attempts by the US to lower costs of medical care, and to restructure Obamacare will make the playing field more friendly for generics. In any case, this is going to happen one way or the other, and being the largest company in India and the 5th largest in the world, and operating in all important geographies, Sun Pharma is the obvious choice to participate in this space.
protrade

Extremely nice analysis and superbly worded. Have touched the nerve of the stock without delving into technical and fundamental jargon ,,,

Do you write in any magazine?
 

apegaonkar9

Well-Known Member
#4
Thanks for information on sun Pharma.
I am holding Sun Pharma from long time its contributing nearly loss of more than 12% at current value. It's really surprising why stock is moving down side campared with its peers major positive factors are in favour of Sunpharma.
Looking forward to see more positive move. Oh it's market fantastic place to test one self. :clapping::clapping::clapping:
 

protrade

Well-Known Member
#5
protrade

Extremely nice analysis and superbly worded. Have touched the nerve of the stock without delving into technical and fundamental jargon ,,,

Do you write in any magazine?
Thanks Mastermind - I don't write in any magazine. But looking for opportunities - just don't know which doors to knock!

Please also check out my analysis of Tata Motors and Coal India. Will be shortly coming up with a detailed analysis of a few more stocks.
 

mastermind007

Well-Known Member
#6
Thanks Mastermind - I don't write in any magazine. But looking for opportunities - just don't know which doors to knock!

Please also check out my analysis of Tata Motors and Coal India. Will be shortly coming up with a detailed analysis of a few more stocks.
Hmmmm

Had already seen tatamotors and coalindia report. Really liked the fact about India being able to export coal instead of having to import.

But, I doubt that writing for any (most) magazinez will allow you same degree on leeway in terms of clarity and simplicity. If you want to monetize this skill of yours, you'd do better as independent consultant.
 

protrade

Well-Known Member
#7
Good move in Sun Pharma today. And stock should continue to do well from here - after decisive break.

Have seen good moves in Nifty, Tata Motors, Sun Pharma and the Banks. I wonder how many people have benefited out of the analysis. I have given very clear picture, including aspects that were completely skipped by the analyst community.

Now waiting for some powerful moves from Reliance and Coal India. Reliance is showing signs of moving, but this is nothing yet.

Bull market is intact. Big move down in TCS, the biggest stock in Nifty, completely ignored by market, and making new high. 9100 is just a hop skip jump away!! Expect to blow past 9100 next week, if all is well.

Fasten your seat belts! FCNR money has barely started coming in!!
 

protrade

Well-Known Member
#8
Market reacting to strike by Former Ranbaxy sales people - obviously over-reaction. For a company this size, 400-500 sales people is not a big deal one way or other. This will be resolved at some point.

But the thing is, these striking employees have zero future with Sun anyway - they simply don't realize that, and are pushing their luck. Maybe company will yield to demands now, and then ensure they are handled some other way in the future. The main agitation is about terms of employment - like amount of leave (which was higher in Ranbaxy - if you want more leave, go work for someone else who will give you more leave!), and also designation.

Every company has to ensure a level playing field post integration, and obviously, in this case, the Ranbaxy guys will have to lower their expectations or find another job! Sun simply cannot increase benefits for the entire company to continue an unsustainable situation with Ranbaxy employees, nor can they allow Ranbaxy employees to have some special privileges.
 

protrade

Well-Known Member
#9
In what could be a significant boost for Sun Pharma, and other Indian pharma cos, one of the top US insurers has decided on a radical change - to completely drop support for certain branded drugs, in favour of their generics.

Gleevec went off exclusivity on August 1st, and it was expected that prices would drop. But last week, United Health announced that it was dropping support for Gleevec, and its patients would now have to compulsorily shift to the generic version. This is because there was some controversy that prices were not dropping nearly as much as they should have, because of some "understanding" between Novartis and Sun Pharma.

This comes more as a punitive measure to Novartis, because now, ALL sales of Gleevec to patients covered by United Health have stopped. Patients must buy only the generics made by Sun Pharma and others.

The main objective is to prevent companies from coming to such agreements that prevent price from falling in the first place. But the unintended benefit is that the generic manufacturers get boosts in revenue.

If more insurers follow suit, this could bring about significant changes in the industry. In 1994, the move towards generics started, but this movement has not really benefitted customers as much as it could have, because of issues in the industry. With this sort of aggressive stance by insurers, hopefully, generics will come about faster and cheaper.

http://www.fiercepharma.com/pharma/...excluding-meds-from-sanofi-amgen-and-novartis
 

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