Speaking during the company’s June quarter earnings call, management said the 80.5% gross margin reported in the first quarter was not driven by one-off gains but by a structural shift in its product mix. Higher-margin branded generics and innovative medicines now account for a larger share of revenue, giving the company confidence that profitability can remain resilient.
“These margin levels are sustainable,” management said, adding that the improvement remained visible even after adjusting for the impact of lenalidomide sales in the corresponding quarter last year.
The comments come even as Sun Pharma’s US generics business remains under pressure. US generics sales declined 9.7% year-on-year during the June quarter, hurt by lower lenalidomide sales and increased competition across several products.
Despite that, the company launched five generic products in the US during the quarter and expects additional launches in the current quarter. It also maintained its guidance for high single-digit revenue growth for the full year, despite posting 10.1% revenue growth in the June quarter.
Sun Pharma said it would continue investing in future growth, reiterating that research and development spending for the full year would remain in line with previous guidance. Around 30% of its R&D expenditure is being directed towards innovative medicines, with the remainder allocated to generics and products for India. Management said first-quarter R&D spending appeared lower because of quarterly timing and would normalise over the rest of the year.
The company also expects momentum in its specialty medicines business to continue. Recent launches such as Unloxcyt and Leqselvi are gaining traction, with formulary access for Unloxcyt expanding across cancer centres and integrated health systems, while Leqselvi has secured another payer covering a majority of eligible patients. Sun Pharma is also evaluating additional indications for both therapies.
On semaglutide, management said the company is prepared to meet demand in India, South Africa and Brazil using in-house manufacturing for both the active pharmaceutical ingredient and formulations, supported by partnerships for delivery devices. The drug has already been launched in South Africa, while a Brazil launch is expected shortly through a partner. However, the company said it was too early to comment on the competitive landscape as approvals for rival generic manufacturers continue to evolve.
Sun Pharma reported mixed June-quarter earnings. Net profit rose 27% year-on-year to ₹2,894 crore, while revenue increased 10.5% to ₹15,299 crore. EBITDA rose 3% to ₹4,417 crore, with the EBITDA margin at 28.9%, compared with 31% a year earlier. The company’s US business contributed $427 million in sales, accounting for around 26.6% of consolidated revenue.
Shares of Sun Pharma ended 0.7% lower at ₹1,987 on the National Stock Exchange on Friday.
Also read: Sun Pharma Q1 Results: Stock falls 3% from highs after US sales miss expectations
