Specialty drugs may push Sun Pharma's US biz beyond $2 bn by 2025

Betting on its specialty drugs portfolio, analysts expect the revenue from Sun Pharmaceutical Industries’ US business to cross $2 billion by 2025. The Mumbai-based firm is currently working on clinical trials of four specialty drugs.

Specialty medicines are used to treat chronic, complex, and rare diseases. These medicines are typically more expensive than traditional medicines. Also, they differ in terms of the complexity of disease management and their distribution. The share of specialty medicines in overall pharmaceutical spending has been consistently increasing over the past decade, from 22 per cent in 2011 to 39 per cent in 2021. By 2026, it is expected to further increase to 45 per cent globally.

In FY22, global specialty revenue recorded 39 per cent growth to reach $674 million, riding on the back of Ilumya (psoriasis drug) sales, which went up 81 per cent to $315 million.

Sun Pharma’s Chief Financial Officer (CFO) C S Muralidharan told Business Standard: “If you see our overall specialty business revenue contribution to our consolidated turnover — it has grown consistently from 7 per cent in 2018 to 13 per cent in the current quarter. During the June quarter (Q1FY23), specialty sales were about $191 million, up 29 per cent year-on-year (YoY). The specialty ramp-up is driven by improved prescriptions.”

Sun Pharma in-licensed and commercialised Winlevi, an anti-acne product, in the US market during 2021-22. According to Edelweiss Research, approved in August 2020, Winlevi became commercially available from October 2021 and is now clocking 7,000-8,000 prescriptions every week.

However, some of Sun Pharma’s existing specialty drugs – such as Ilumya and Absorica -- are expected to see increased competition. Muralidharan said: “We understand that Ilumya, among others, is facing stiff competition from other companies, but it has performed very well. Going by the past trends, we expect it to continue performing very well. Take the example of Absorica, which saw generic entry after April, where sales have continued to remain robust. We expect to see growth from newer markets, apart from the US where we can also leverage the opportunities for our key specialty products.”

Sun Pharma is trying newer indications for Ilumya like psoriatic arthritis. Currently, the drug is only prescribed by dermatologists.

Sun Pharma’s specialty R&D pipeline has four molecules undergoing clinical trials.

Ilumya is undergoing Phase-3 clinical trials for psoriatic arthritis. “A successful Phase-3 trial, subject to regulatory approval, is likely to expand the addressable market for Ilumya,” the company said in its annual report.

Another drug code-named 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 good cardiac safety profile.

A drug code-named MM-II is currently in Phase-2 trials as a potential treatment for knee pain in patients with symptomatic knee osteoarthritis. Sun Pharma also has a diabetes drug -- GL0034 -- in Phase-1 clinical trials.

“Pre-clinical data had demonstrated significant outcomes on various diabetic parameters, such as glucose reduction, decrease in HbA1c, augmented insulin secretion, lowering of glucagon level, a meaningful reduction in triglyceride levels, and larger body weight reduction,” Sun Pharma noted in its FY22 annual report.

The company feels that growth in developed markets will be driven by the adoption of new treatments and specialty medicines. But there will be a loss of exclusivity and competition from generics and biosimilars

Edelweiss Research has noted that Sun Pharma’s specialty products are likely to be key growth drivers in the next three years, and it estimates its US revenue to touch $2.1 billion by FY25 riding on growth from these products.