SUN Pharma (BUY, TP Rs 750): Revlimid patent settlement drives multiyear value growth; Incremental earnings of 15% in FY23
Sun Pharma announced generic REVLIMID (lenalidomide) patent litigation settlement with innovator – Celgene. It allows SUNP to start selling certain volume-limited amounts of gRevlimid after March 2022 and unlimited quantity beginning 31st January 2026, subject to regulatory approval by US FDA.
Revlimid capsules clocked $8bn in revenues in the last 4 quarters in US with sales estimated to reach $10.7bn in CY23.
We estimate the gRevlimid to add incremental sale of US$ 275mn with a profit of US$ 150mn(implying an incremental earnings of 15%) in FY23.
We believe this is an incremental qualitative earing trigger for SUNP in the visible future, which coupled with improving specialty business, bottoming out of Taro performance and robust domestic business (with margins 45-50%), will drive value growth as well as re-rating of the stock.