RESEARCH REPORT – SUN PHARMACEUTICALS

GENERAL OVERVIEW

Sun Pharmaceuticals Industries Ltd. is the largest pharmaceutical company from India having
a wide array of capabilities spanning different dosage forms and over the counter products.
The company manufactures and markets a large basket of pharmaceutical formulations
covering a broad spectrum of chronic and acute therapies. Sun Pharma has also made
important strategic acquisitions including Ranbaxy Laboratories Limited that has increased
the company’s presence across the globe. I feel that its mergers and acquisitions will play out
well for the company in the long run. Being a market leader, it is not only India’s most valuable
drug maker, but it also has state-of-the-art manufacturing facilities and has made significant
progress in terms of innovations. I also think that as an investment, Sun Pharma’s stock seems
to be a lucrative option given the share price trends and the growth prospects for the Pharma
industry in India in the backdrop of the COVID-19 pandemic.

SHAREHOLDING PATTERN

From the shareholding pattern of the company that is summarised below, we can conclude
that Sun Pharma is majorly owned by promoters.

Category % Share Holding

Promoters 54.48%
Foreign institutions 12.19%
Banks and Mutual funds 10.99%
General Public 7.2%
Financial institutions 9.86%
Others 5.29%
Source: The Economic Times
MANAGEMENT OF THE COMPANY

Sun Pharmaceuticals originally started off as a partnership firm incorporated by Dilip Shanghvi
and his family to manufacture pharmaceutical formulation. It was then converted into a public
limited company promoted by Dilip Shanghvi. Sun Pharma comprises of highly qualified
management professionals who have had several years of industry experience.

Dilip Shanghvi, Managing Director

Dilip Shanghvi is the founder of Sun Pharmaceuticals Ltd. He is

also the Chairman and MD of Sun Pharma Advanced Research
Co. Ltd, and Chairman of the Shantilal Shanghvi Foundation. He
is a first-generation entrepreneur with an extensive industrial
experience in the pharma sector. Shanghvi was also among one
of the first drug bosses to see through the labyrinth of
complexity in India’s patent regulations, product approvals,
price controls and compulsory licensing.

Management team and key executives

Name Designation

Aalok Shanghvi Senior Vice President

Abhay Gandhi Chief Executive Officer

Anilkumar Jain Chief Executive Officer

Atanu Roy Senior Vice President

Azadar H Khan Senior Vice President

C S Muralidharan Chief Financial Officer

Davinder Singh Senior Vice President

Dilip S Shanghvi Managing Director

Hellen de Kloet Business Head

Israel Makov Chairman

Jila Breeze Senior Vice President & Head

Kalyanasundaram Subramanian Whole Time Director

Kirti Ganorkar Chief Executive Officer

Pradeep Sanghvi Vice President

 Sailesh T Desai Whole Time Director

Sapna Purohit Senior Vice President & Head - HR

Sreenivas Rao Senior Vice President & Head

Sunil R Ajmera Company Secretary

Uday Baldota Chief Executive Officer

SWOT ANALYSIS OF SUN PHARMACEUTICALS

The SWOT analysis of Sun Pharmaceuticals gives insights related to the company’s strengths,
weaknesses, opportunities & threats by assessing both the internal factors as well as external
factors influencing the company. The SWOT analysis is a proven management framework
which can aid in benchmarking business performance as compared to its other competitors
in the pharma industry.

Strengths Weaknesses

Opportunities Threats

Strengths

➢ Robust marketing and sales force

➢ Growth prospects in emerging market business
➢ Good track record of successful mergers and acquisitions such as Ranbaxy laboratories
➢ Strong reach and brand presence in the Indian and US markets

Weaknesses

➢ Limited growth in market share owing to owing to intense competition from Indian and
foreign brands
➢ Limited presence in European countries and emerging markets
➢ Few underperforming subsidiaries hampering the overall performance of the company
➢ Regulatory hurdles in manufacturing processes
Opportunities

➢ Ability to leverage its diverse portfolio of acquisitions to increase growth prospects

➢ Opportunity to increase its presence in contract manufacturing
➢ The increasing healthcare awareness in India, especially in the context of the ongoing
pandemic presents an opportunity for Sun Pharma to expand

Threats

➢ Increasing competition in the generics market poses a threat to Sun Pharma

➢ Since the company is to a large extent reliant on acquisition-based growth, it could result
in a stage of financial crunch for the company in the future
➢ Stringent patent regulations pose a major challenge
➢ High price sensitivity of customers is another threat as they can easily switch brands

COMPETITIVE ANALYSIS

Parameters Sun Pharma Cipla Dr. Reddy’s Laboratories

Market capitalisation 148,866.74 67,432.43 76,818.70
Net Profit 3,211.14 2,318.17 2,937.70
Total Assets 30,158.24 17,409.02 16,254.80
EPS 13.38 28.75 176.90
ROE 13.16% 13.32% 19.33%
**Figures are in Rs. Crores, Year ended March 31, 2020

As compared to its other competitors in the pharmaceutical industry in India, Sun Pharma
seems to be performing better than Cipla and Dr. Reddy’s Labs in terms of market
capitalisation, net profits and total assets side. However, it is lagging behind in terms of a few
parameters in the analysis given in the table above. A lower EPS and ROE as compared to its
counterparts maybe worrisome for the company in terms of discouraging investor interest.
The higher ratios of the other two companies show better growth prospects and earning
potential in the future.

CONCLUSION AND WAY FORWARD

▪ Sun Pharmaceuticals has India and US as its predominant markets which account for
nearly 70% of the company’s revenue. It has a robust product pipeline with good R&D
capabilities. Sun Pharma’s strategic acquisitions such as that of Ranbaxy has enabled the
company to expand its operations across the globe.
▪ The way forward for Sun Pharmaceuticals would be to explore European countries and
emerging markets to increase its sales and also use the trend of increasing healthcare
awareness in India to its advantage.