Dilip Shanghvi
Chairman and Managing Director
Dear Shareholders,
Your Company, Sun Pharma, turned 40 this year. Our global offices
commemorated the milestone in many small but thoughtful ways. It was also a moment to
reflect on our learnings, on what will keep us agile amid expansion, how we plan to manage
growth and continuity and how we can evolve further while keeping our core values intact.
Age is just a number though, and we feel as if we have just started.
The contribution of Global Specialty, our new growth engine, has continued to increase and
has grown from 7% of consolidated revenues in FY19 to 18% in FY24. Our focus on building
out the Specialty business is the outcome of a conscious effort to diversify the
Company's revenue streams. The effort towards expanding Specialty also speaks of the
business' need to stay agile in an ever-changing environment.
While increasing size has come with healthy cash flows, it remains
paramount that we constantly evaluate structural shifts in our industry for their
potential impact. Pharmaceuticals is a highly regulated industry across the value chain
and individual regulatory actions can have profound effects on the Company. This is an
important lesson we have internalised in the first 40 years of our existence, and
therefore, it has been our endeavour to minimise risk in each of our businesses.
We also believe that the lessons of the first 40 years have positioned
us well for the next chapter of the Company's growth. Our market share has continued
to improve across geographies, including India. We remain resolutely focused on serving
patients and prescribers, a principle that has been close to our hearts since inception.
Recent examples of this customer-centric mindset include broadening our Global Specialty
pipeline with deuruxolitinib and NidlegyTM while expanding our field force in
India and the Emerging Markets.
During FY24, our global consolidated revenues grew by 10.4% to 478
Billion, while EBITDA grew by 11.8% to 130 Billion. Adjusted net profit was up by 16.5% to
101 Billion. Our return ratios also continued their upward momentum. Our cash balance of
US$ 2.4 Billion enables us to explore large transactions, should a suitable opportunity
present itself.
This year, we made further investments towards enhancing our
capabilities in the Global Specialty business. We made critical hires in several
functions, some of which are visible as new additions to the senior management team.
Specifically, our focus has been to improve our in-house clinical development capabilities
for which we are building a clinical organisation, globalising our Specialty assets beyond
the US, and deepening our business development capabilities.
Our Specialty R&D spend has continued to increase in our bid to
strengthen our innovation pipeline. We spent US$ 148 Million on Specialty R&D in FY24
vs US$ 65 Million in FY20, accounting for 78% of the total R&D increase during the
period. Our increased R&D guidance for this year indicates our intent to advance
existing projects and further enrich the Specialty pipeline in our core therapy areas.
Operational Performance
For FY24, India formulation sales were at 149 Billion, up by 9.5%, and
accounted for 31% of the overall revenues. Our India business growth was ahead of the
industry growth, driven by our strong brand equity with doctors. As per AIOCD AWACS March
2024 data, our market share improved to 8.5% on MAT basis compared to 8.3% share during
the previous period.
As per SMSRC data for MAT February 2024, Sun Pharma ranks 1 by
prescriptions with 12 different classes of doctors. We strengthened our portfolio
leadership with 52 new product launches in India.
We undertook field force expansion in India in FY24, adding 10% to our
existing strength. The field force expansion, implemented in successive rounds over the
last four years, has helped us declutter our portfolio and expand our presence in Tier II
and Tier III towns.
We are deeply committed to improving access to medicine in India. Wider
availability of medicines and patient compliance are critical to ensuring health security
for India's vast population. As per AIOCD AWACS, our growth in India was primarily
driven by volume as well as new product launches. In contrast, in India, the Pharma market
growth was driven to a great extent by price increases. This year, we are especially
pleased to have introduced four innovative products in India, either from our global
portfolio or via licensing. These include Cequa for dry eye disease, Tyvalzi for the
treatment of ischemic stroke, Rytstat for the treatment of anaemia associated with chronic
kidney disease, and Lyvelsa for slowing down the progression of and reducing the risk of
kidney failure associated with Type-2 diabetes.
Revenues in the US grew by 13.4% to 153 Billion and accounted for 32%
of our consolidated revenues for FY24. Specialty sales in the US has continued to gain
traction. While the generics business faced the negative impact of ongoing compliance
issues at our Halol and Mohali facilities, we were able to partly compensate it through
new launches and market share gains.
Our subsidiary, Taro, recorded a 9.8% growth in overall revenues to US$
629 Million.
The year saw us enter into a definitive merger agreement with Taro for
the acquisition of all its outstanding shares. Taro remains a key player in the generic
dermatology market, even in a challenging environment. As a combined entity, we will move
firmly forward, leveraging our global capabilities to serve the needs of patients and
healthcare professionals.
Our Emerging Markets sales grew by 9.1% to 86 Billion and contributed
18% to our consolidated revenues. In local currency terms, large markets like Brazil and
Romania recorded strong double-digit growth. We increased our field force in key Emerging
Markets this year by 9% to over 2,500. This showcases our long-term commitment to these
geographies.
Sales in the Rest of World (RoW) markets grew by 11.1% to
67 Billion and contributed 14% to consolidated revenues.
Growth here was spurred by higher sales in Western Europe led by
Specialty and the ramp-up in Ilumya sales in Australia and Japan. Odomzo also gained
traction in RoW markets.
Global Specialty Business Performance
Global Specialty revenues recorded a strong 19.3% growth to reach US$
1,039 Million. Ilumya sales continued to do well globally and were up by 21.7% to US$ 580
Million.
The following products were key contributors to the Global Specialty
business growth in FY24.
Select Products from the Marketed Portfolio
• Ilumya/Ilumetri is an IL-23 inhibitor biologic used in
the treatment of adults with moderate-to-severe plaque psoriasis and who are candidates
for systemic therapy or phototherapy. It is marketed by Sun Pharma directly in several
markets, including in the US, Canada, Australia, Japan and in Western Europe and China
through our partners. Ilumetri was included in China's National Reimbursement Drug
List from January 2024.
• Winlevi is a first-in-class topical androgen receptor
inhibitor, approved by the US FDA for the topical treatment of acne vulgaris in patients
above the age of 12. Winlevi is the first US FDA-approved acne drug in nearly 40 years
with a first-in-class mechanism of action. Besides the US, where it is already marketed,
Winlevi was launched in Canada during FY24 and is expected to be available in Australia
from June 2024.
• Cequa, indicated for topical ophthalmic use, is the first
and only US FDA-approved cyclosporine treatment delivered with NCELLTM
technology. Cequa, which offers the highest concentration of cyclosporine for ophthalmic
use approved by the US FDA, is indicated to increase tear production in patients with dry
eye, an inflammatory disease that afflicts more than 16 Million people in the US.
• Odomzo is indicated for the treatment of adult patients
with locally advanced Basal Cell Carcinoma (laBCC) that has recurred following surgery or
radiation therapy, or for those who are not candidates for surgery or radiation therapy.
Odomzo works by inhibiting a molecular pathway known as the hedgehog signalling pathway,
which is implicated in the origination and development of BCC when the pathway
malfunctions. Odomzo is available in the US and several other international markets.
• Levulan Kerastick+BLU-U combines a powerful 20%
aminolevulinic acid HCl (ALA) topical treatment with blue-light precision while minimising
exposure to the deeper tissue. It is the only Photo Dynamic Therapy indicated for the
treatment of minimally to moderately thick actinic keratoses of the face or scalp, or
actinic keratosis of the upper extremities.
Research & Development (R&D)
Our R&D investments stood at 32 Billion, or 6.7% of overall sales.
During the year, we filed approximately 250 formulation dossiers globally. In FY24, the
Company took steps to improve study enrollment for our Global Specialty pipeline
candidates, including creating a clinical organisation within Sun and hiring key talent to
lead the same. Sun Pharma also continues to scout for external R&D assets to
strengthen the pipeline. R&D spending is expected to increase as clinical trials for
Specialty products gain traction.
Sun Pharma's Specialty R&D pipeline has six candidates
undergoing clinical trials:
• Deuruxolitinib's New Drug Application (NDA) was
filed with USFDA for the treatment of moderate to severe alopecia areata during FY24. The
FDA has assigned Prescription Drug User Fee Act (PDUFA) date of July 2024 for our
application. Open Label Extension studies for deuruxolitinib are ongoing.
• Our partner product NidlegyTM is expected to
be filed with the European Medicines Agency (EMA) for locally advanced fully resectable
melanoma during H1CY24. The candidate's Phase III PIVOTAL trial met the study's
primary objective, demonstrating statistically significant and clinically meaningful
improvement in recurrence-free survival for patients with locally advanced fully
resectable melanoma. Nidlegy™ is currently being investigated in two Phase III
clinical trials for the treatment of locally advanced melanoma and in Phase II clinical
trials for the treatment of high-risk BCC and other non-melanoma skin cancers. Sun Pharma
is the commercial partner for the candidate in EU, Australia and New Zealand.
• Our currently marketed product, Ilumya, is undergoing
Phase-3 clinical trials for additional indication of treatment of psoriatic arthritis.
Topline data for the studies is expected during the H2CY25.
• MM-II has completed Phase-2B trial as a potential
treatment for knee pain in patients with symptomatic knee osteoarthritis. Phase-3 for the
candidate is expected to begin during the H1CY25.
• SCD-044 is in Phase-2 clinical trials as a potential oral
treatment for atopic dermatitis and moderate to severe plaque psoriasis. SCD-044 is a
selective S1PR1 modulator, with a potentially safe cardiac safety profile. Topline data
for the indication of atopic dermatitis is expected to be available during the H2CY24.
Topline data for the indication of psoriasis is expected to be available during the
H1CY25.
• GLP-1R (Glucagon-Like Peptide-1 Receptor) agonist has
completed Phase-1 clinical trials. Early clinical data demonstrated marked weight loss in
single and multiple ascending dose studies. The drug was well tolerated, and we expect to
start enrolling patients for Phase-2 trials during the H2CY24.
We strive to remain disciplined in identifying future R&D projects
for the US generics market with a focus on developing complex products.
cGMP Compliance
Adherence to global cGMP standards is a key priority for us, and we
have a relentless focus on 24x7 compliance to ensure continuity of supplies to our
customers and patients worldwide.
We have pending USFDA compliance issues at three of our facilities.
These include the import alert at the Halol facility and the receipt of non-compliance
letter for the Mohali facility, both during FY23. In December 2023, FDA inspected Sun
Pharma's Dadra facility and has subsequently determined the inspection classification
status of this facility as Official Action Indicated (OAI). Besides these three, all our
facilities remain compliant with global regulatory bodies, including the US FDA.
Sustainability
We continue to integrate principles of sustainability within our
business through well-defined goals and initiatives, coupled with a clear roadmap to
achieve these objectives. We are committed to addressing the impact of climate change
through strategic actions to manage and mitigate carbon emissions associated with our
operations. In FY24, we initiated a physical and transition climate risk assessment and
also carried out a Biodiversity risk assessment for five of our manufacturing locations.
We have also implemented multiple focused initiatives to attract and retain a highly
diverse and skilled workforce. Our Corporate Social Responsibility (CSR) initiatives
continue to positively impact underprivileged communities and respond to their needs
across diverse areas.
Our corporate governance approach rests on our commitment to go beyond
compliance, increase transparency and foster reliability, trust and consistency. As a
member of the United Nations Global Compact (UNGC), we support the 10 principles covering
human rights, labour, environment and anti-corruption, and we incorporate these principles
into our business. I am happy to mention that Sun Pharmaceutical Industries Limited has
been included in the S&P Global Sustainability Yearbook 2024, a select group of
companies with demonstrated strengths in sustainability.
Efficiency Improvement
Our focus has always been on sustainable cost reduction via
technological interventions and process enhancements. We are also directing our efforts
towards reducing working capital deployment across our businesses. Sustained efforts are
being made to further improve our manufacturing efficiencies, optimise our manufacturing
footprint and reduce overall fixed costs.
Net Cash and Deployment Opportunities
At year-end, Sun Pharma had a strong net cash position of approximately
US$ 2.4 Billion, which enables us to explore inorganic opportunities, including but not
limited to strengthening our Global Specialty portfolio.
Overall Outlook
We expect high single-digit consolidated topline growth for FY25. We
expect to see Sun's Global Specialty business continue on its growth path. Our
R&D spending has been on an upward trajectory due to increased clinical study spending
to advance our Global Specialty pipeline. For FY25, we expect our R&D spend to be in
the range of 8-10% of sales, with an increasing share of spending expected on Specialty
products.
Top Priorities for FY25
• To improve compliance record of manufacturing operations, and
work towards bringing the three facilities facing US FDA action back into fully compliant
status
• Advance our pipeline of Global Specialty products with several
milestones coming up in FY25, including PDUFA date of deuruxolitinib, NidlegyTM
filing in Europe SCD-044 data
• Ensure supply chain continuity and simultaneously focus on
inventory optimisation
• Enhance IT systems to facilitate business operations, ensure
security and digital transformation
• Embed sustainability practices in our operations; we have set
clear and actionable targets to achieve our sustainability goals
• Continued focus on cost and operational efficiencies
• Maintain the ongoing trend towards improving overall return
ratios
Sun Pharma's growth over the last 40 years would not have been
possible without the company's dedicated workforce. This year, Sun's employee
headcount grew by over 4% to become over 43,000 strong. We continue to work towards
ensuring that our Human Resource management systems and policies keep pace with this
expansion. Our endeavour is to treat all our employees in a fair and equitable manner.
We are grateful to our Board of Directors for their continued guidance
and support.
Your support, as a shareholder, is of vital importance to us, and we
hope that you will continue to repose your confidence in us in the future.
Regards,
| Dilip Shanghvi |
| Chairman and Managing Director |
| Sun Pharmaceutical Industries Limited |