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Target: ₹2,000 CMP: ₹1,685.75 Sun Pharmaceutical Industries’ (Sun Pharma) Q2-FY25 results were healthy and above our/Bloomberg consensus (BB) estimates by about 2 per cent on the revenue front. Margin came in at 28.3 per cent, 30 bps above our estimate and in line with the BB estimate. Notably, R&D spending was 5.4 per cent, much below management’s guidance of 6-8 per cent for FY26F; R&D guidance now stands revised to the lower end of 6-8 per cent, which should provide some cushion to margin from the $100m investment being made in sales and distribution (S&D) in FY26F. The US business saw a q-o-q growth of 5 per cent (at $496 million vs. the estimate of $485 million), led by Ilumya, Cequa and Odomzo. The gRevlimid contribution was flat q-o-q. Innovative medicine sales in the US have surpassed generics for the first time in 2QFY26. The global innovative medicines business posted a robust performance ($333 million, +7 per cent q-o-q), led by Ilumya. Odomzo, in the hedgehog inhibitor segment, currently has 60 per cent + market share in the EU, whereas over 50 per cent market share in the US among dermatologist prescribers. India biz continued its double-digit growth (11 per cent y-o-y growth vs. 12 per cent estimate), largely led by volume and new launches. Downside risk: Slowdown in the specialty portfolio. Published on November 6, 2025
