Sun Pharma to get growth boost with addition of Deuroxolitinib to its speciality portfolio: Analysts

Brokers remain positive about the acquisition and believe in the growth potential of Deuroxolitinib, which is a part of Concert’s patent portfolio

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Sun Pharma announced the acquisition of US-based Concert Pharma on January 19, in a $576-million deal that is expected to be completed by 1QFY23.

With this acquisition, Sun Pharma has added Deuroxolitinib to its speciality portfolio, which is a Deuterium-modified Analogue of Ruxolitinib, and enhances its offerings in the dermatology space.

Concert is a late-stage biotechnology company pioneering the use of deuterium in medicinal chemistry. The company has a patent portfolio that includes its lead product candidate deuruxolitinib, an oral inhibitor of Janus kinases JAK1 and JAK2 for the treatment of Alopecia Areata, an autoimmune dermatological disease, which is in late-stage development.

Brokers remain positive about the acquisition and believe in the growth potential of deuruxolitinib.

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According to foreign brokerage firm Morgan Stanley, Concert acquisition addresses capital allocation clarity for Sun Pharma and clinical trials of Deuruxo appears promising with limited competition and likely best-in-class profile, and believe it has strong sales potential. They also add that the addition should enable continuity in growth for the specialty business for next few years. They have given Sun Pharma an overweight rating at a target price of Rs 1,150 per share.

Analysts at Motilal Oswal also maintain a buy rating and say that deuruxolitinib has shown a better severity of alopecia tool (SALT) score compared to peers which provides confidence in the potential of the product post regulatory approval. They also believe the synergies provided by the development potential of Concert and marketing capabilities of Sun Pharma will aid in significant value accretion on combined basis.

Motilal Oswal provide a target price of Rs 1,200 and expect a 16 percent earnings CAGR over FY23-25, led by a 17 percent/11 percent sales CAGR in the US/emerging markets and RoW, aided by a 110bp margin expansion.

Shares of Sun pharma were quoting at Rs 1,033.10 per share on the NSE as of 2:50 pm on January 20, down 0.6 percent from yesterday’s closing of Rs. 1,039.40.

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