IIFL has a reduce call on Sun Pharmaceutical Industries with a target price of Rs 450.The current market price of Sun Pharmaceutical Industries is Rs 465.80.
Time period given by the brokerage is one year.Rationale by the brokerage:Ilumya Rx ramp-up has been slow: Sun launched its IL-23 psoriasis product, Ilumya, in the US market around 5-6 months ago.
However, total prescription (TRx) ramp-up for the product has been very slow since launch, with Ilumya garnering only 180 TRxs for Feb-19.
Ilumyas TRx count is significantly below that of market leaders in the psoriasis segment, with JNJs Stelara and Novartis Cosentyx averaging monthly TRxs of nearly 24K and nearly 48K respectively.Initial launch trajectory for Ilumya significantly below Tremfyas: The two most-recent product launches in the psoriasis market, just before Suns Ilumya, were JNJs Tremfya (IL-23) and Valeants Siliq (IL-17), both of which were launched in Jul-17.
We compared the initial launch trajectory of Ilumya and Tremfya, given that both products have the same MOA (IL-23).
In the 27th week of launch, Tremfyas TRxs were nearly 24x that of Ilumyas current weekly TRxs.
This indicates that Ilumya is not only underperforming market leaders but also one of the recently launched similar products.Ilumyas monthly TRxs will have to increase 6-7x to reach our FY20ii sales estimate of US$50m: Valeants Siliq, with monthly TRxs of nearly 900, is generating a quarterly revenue of only US$6m.
Based on the weighted average price of Cosentyx, Taltz and Tremfya, Ilumyas monthly TRxs will need to increase, from the current nearly 180 to nearly 1,200, for the product to reach our FY20 sales estimate of US$50m.
While this is not impossible, it would require significant detailing efforts by Suns commercial team as well as investment in DTC spends.