Sun Pharma

2012 Generics Revenue: $2.07 billion

Most companies, frustrated with standstill Western markets and eyeing future growth, are seeking out revenue opportunities in emerging markets like India. India's Sun Pharma, on the other hand, has flip-flopped that strategy. The company has completed 11 transactions since 2001 to bolster sales, but lately it's done so mostly in North America and Europe.

Within the past year or so, Sun has picked up U.S. based dermatological specialist DUSA Pharmaceuticals and acquired Takeda's U.S. generics business. It reportedly considered bidding on Sweden's Meda and Germany's Stada. And as it has before, Sun tried to buy the 40% of Taro Pharmaceuticals it doesn't already own, for access to Taro's market share in the U.S. and Canada; once again, it failed.

Building by acquisition is a trend managing director Dilip Shanghvi says he'd like to continue, however, and it's no wonder. U.S. sales in Sun's most recent quarter registered 28% higher year-over-year, and as of August, shares sat about 50% higher than they had 12 months earlier. Overall, Sun's share price has increased sevenfold since 2007.

The key for Sun has been capitalizing on a lucrative market for branded generics. It followed in the footsteps of some of its Indian counterparts by striking a Big Pharma partnership. And it moved quickly after that. About one week after Sun and Merck ($MRK) announced a combined effort to bring generics to emerging markets, Sun cashed in on the growing prevalence of diabetes in India, releasing its versions of Januvia and Janumet.

Sun also makes difficult-to-manufacture drugs, a strategy that's about to pay off in a big way with its version of Johnson & Johnson's ($JNJ) Doxil. J&J expects its cancer treatment to be in short supply through the end of 2014. After previously allowing imports of Sun's unapproved generic to combat scarcity in the U.S., the FDA fast-tracked approval for the drug. For now, that gives Sun the market all to itself.

Sun's one recent misstep was a big one. Last quarter, the company paid Pfizer ($PFE) and Takeda $415 million, as part of a settlement over the acid reflux drug  Protonix. In the throes of a patent dispute, Sun launched a generic version, hoping it could win in court. It didn't, and the at-risk launch put it in line for big damages. The payment took quarterly earnings from a $204.8 million profit to a $215 million loss. But it could have been worse, as Teva ($TEVA) demonstrated: The Israeli company also launched an at-risk generic and wound up responsible for a $1.6 billion portion of the overall settlement.

"If you exclude the one-time payment, which was known to the market, the sales, margins and profits have all beaten our estimates," Centrum Broking analyst Ranjit Kapadia told Bloomberg in August.

Of course, Sun's success hasn't helped it make many friends in the Big Pharma sphere, particularly for its role in IP disputes. Novartis ($NVS) struggled for years with Sun over intellectual property rights in India for its cancer drug Glivec, ultimately losing out to the Indian company in the high-profile battle. A host of multinational corporations have since watched helplessly as Indian officials revoked their patents, which in turn has made some companies rethink investing in the market despite its promising growth. As for Sun, it reignited the patent war with Novartis just a few months ago on U.S. turf. It sued the Swiss drug giant, demanding the right to launch a copy of the leukemia treatment, marketed as Gleevec in the U.S., before its patent expires.

For more:
Sun to benefit from Doxil shortage, but CEO eyes deals for bigger growth
Sun has terrific quarter, except for that Pfizer thing
Novartis, Sun Pharma Gleevec patent battle moves to U.S.
Teva loses $2B gamble on generic of Pfizer's Protonix
Fast-growing Sun Pharma eyes $5B deal for Sweden's Meda
Sun calls it quits in 6-year effort to swallow Taro
Sun chief eyes more deals, European and otherwise

Sun Pharma

Suggested Articles

Bristol-Myers already has one Opdivo combo approved in kidney cancer, but it’s going for another—and new trial data could be just the ticket.

Trodelvy's bladder cancer data look weaker compared with what Seattle Genetics' rival drug Padcev achieved in its own trial.

Merck’s Keytruda is battling Bristol Myers' Opdivo in adjuvant melanoma, and it just racked up trial results that will help it even the playing field.