Sun Pharma Q2 Revenue Rises 12% as 17.3% Domestic Surge Offsets US Generics Pressure
Sun Pharmaceutical Industries Limited presented its financial results for the second quarter of the fiscal year, underscoring solid revenue growth powered by its domestic formulation franchise, which cushioned ongoing price headwinds and patent expirations in the United States.
The Mumbai-headquartered pharmaceutical major posted an 11.8% year-on-year rise in consolidated revenue from operations to Rs 16,198.71 crore, up from Rs 14,478.31 crore in the corresponding quarter of the previous fiscal year.
Domestic Strength Drives Top-Line
The cornerstone of the quarter's revenue performance was the Indian formulation business, which registered a 17.3% year-on-year increase in sales to Rs 5,552.3 crore. Domestic sales accounted for approximately 34.5% of Sun Pharma's total consolidated revenue, reflecting sustained volume growth, strong brand recall, and consistent market outperformance across key chronic and acute therapy segments in the Indian market.
In contrast, the U.S. formulations business experienced structural headwinds, with sales declining 8.2% year-on-year to $455 million, representing about 27% of consolidated sales. The downturn in North America was primarily attributed to price erosion in generic drugs and fading revenue contributions from the cancer medication lenalidomide. Sun Pharma's global specialty business provided partial stability, generating $356 million in quarterly revenue, up 6.9% year-on-year.
Exceptional Items Squeeze Reported Profit
Reported consolidated net profit declined 36.4% year-on-year to Rs 1,988.53 crore, down from Rs 3,124.95 crore in the prior-year period. The dip was heavily driven by aggregate exceptional charges of Rs 1,268.8 crore incurred during the quarter.
Key Drivers of Exceptional Costs:
- Professional diligence, legal, and commitment fees amounting to Rs 346 crore in connection with the planned acquisition of Organon assets.
- Settlement and legal expenses related to long-standing U.S. antitrust litigation.
Excluding these one-time expenses, Sun Pharma’s adjusted net profit stood at Rs 3,162 crore, marking a 1.4% increase over the year-ago period.
Operational Margins and Pipeline Advances
The company expanded its gross margin to 80.8% from 79.3% in the same quarter last year, aided by favorable foreign exchange movements and a strategic shift in product mix. However, the consolidated EBITDA margin compressed by 200 basis points to 29.3%, down from 31.3%. The compression was driven by generic price erosions in developed markets and portfolio mix adjustments, with absolute EBITDA recording Rs 4,743.9 crore.
Managing Director Kirti Ganorkar noted that the quarter's momentum was underpinned by resilient performances in India, emerging markets, and rest-of-the-world territories. The company also achieved regulatory milestones, securing U.S. approval for its flagship specialty biologic Ilumya for the treatment of adults with active psoriatic arthritis. In addition, Sun Pharma fortified its cardiovascular therapy pipeline through an in-licensing agreement for lerodalcibep, a PCSK9 inhibitor, covering markets outside the U.S. and China.
Backed by a net cash position of $3.3 billion and the expected closure of the Organon transaction by the fourth fiscal quarter, Sun Pharma continues to lean on its dominant Indian formulation base while reallocating capital into high-entry-barrier specialty assets.
