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In the Pink of Health

Sun Pharmaceutical Industries is one of the rare pharma companies that have sustained their momentum over the years

You can pick a number of winners in the Indian pharma space. Most of them will however have a hard time beating industry leader Sun Pharma. Why is Sun Pharma such a juggernaut?

Sun is one of the rare breed of companies that have sustained their momentum over the years. Sun's revenues have grown by 30 per cent annually in the last ten years while earnings per share grew by 25 per cent.

There is evidence to back Sun's growth will sustain. Its pipeline of 180 ANDA filings, the largest among peers creates a long stream of revenues that can drive Sun's growth for years to come.

Perhaps the biggest weapon in Sun's arsenal; its ability to turn around distressed assets. Sun has bought 16 companies primarily in the US, India and Israel. Dilip Shanghvi, MD, is known to buy his companies at cheap to reasonable valuations and most of his acquisitions have turned out pretty well for him. In keeping with Sun's strategy, future acquisitions are highly likely.

Sun's biggest acquisition to date is the long-ailing Ranbaxy. Ever since the Singh brothers sold off Ranbaxy to the Japanese Daiichi Sankyo, the company has been embroiled in one mess-up after another with the US regulator USFDA. The merger will make Sun the biggest in India and the fifth biggest generic company in the world.

Shanghvi, in a brilliant move, “acquired” the services of Israel Makov, former head of Teva Pharma. Media reports hinted Makov tapped his contacts in Japan to convince Daiichi to sell Ranbaxy. Like Shanghvi, Makov is big on acquisition led growth.

Short-term hiccups. Sun's immediate concern will be to address the USFDA concerns both at its own plants and those at Ranbaxy. The USFDA has been stringent on Indian generic players for many months now. Four of Ranbaxy's plants are now banned from exporting any drugs to the US. Once Sun manages to settle the outstanding USFDA concerns, it will be able to once again sell Ranbaxy's products in the US.