Sun Pharmaceutical Industries Limited — Q2 FY26 earnings call

Call held 11 Nov 2025

Management summary

Sun Pharmaceutical Industries Limited reported a robust Q2 FY26, driven by strong growth in Global Innovative Medicines and India formulations. The company achieved significant sales and EBITDA growth, with margins expanding. Strategic investments in R&D and new product launches, particularly LEQSELVI and anticipated UNLOXCYT, are central to their future growth, despite a decline in the U.S. generics business.

Highlights

  • Q2 FY26 sales at INR144,052 million, recording an 8.6% growth year-on-year.

  • Gross margin for the quarter stood at 79.3%.

  • EBITDA for the quarter was INR45,271 million, increasing 14.9% year-on-year.

  • EBITDA margin percentage was 31.3% for Q2 FY26, up from 29.6% in Q2 FY25.

  • Net profit after tax for Q2 FY26 was INR31,180 million, a 2.6% increase year-on-year.

  • EPS for the quarter was INR13 per share.

  • Global Innovative Medicines sales grew by 16.4% to USD313 million, with U.S. sales surpassing generics for the first time.

  • India Formulation sales were INR47,348 million, growing 11% year-on-year and accounting for 32.9% of total consolidated sales.

What they filed

Q1 FY27: revenue up 2.6%, net profit up 49.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue5,122 6,181 7,179 5,595 4,548 −11%5,688 −8%4,924 −31%5,741 +3%
EBITDA1,332 1,705 3,059 1,910 1,184 −11%1,759 +3%1,329 −57%1,964 +3%
Net profit838 1,156 2,042 745 564 −33%705 −39%609 −70%1,115 +50%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

R&D Spend

  • R&D spend as % of sales R&D Spend · full year FY26 · Medium confidence lower end of 6% to 8%

    Previously 6% to 8% → lower end of 6% to 8%

    So Neha, I think we should come in the lower end of the guidance overall, that's what is our assessment today.

    — Dilip Shanghvi, Chairman

Specialty Spend

  • Spend for new launches (Leqselvi and Unloxcyt) Specialty Spend · this fiscal (FY26) · High confidence USD 100 million
    My first question is on your USD 100 million spend for supporting the 2 launches in this fiscal. So if you can explain how costs will build up, say, majority of hiring for salespeople, etcetera, will be done in this year itself. So going forward in '27, what kind of cost you assume to continue? Some color on that will be helpful? ... Yes. I'm happy to address that. So we did see a slight increase in Q2, and we would expect to see further increases in Q3, Q4 particularly as we launch Unloxcyt.

    — Damayanti Kerai (referencing management's prior statement), Richard Ascroft (confirming increase)

Tax Rate

  • Effective Tax Rate (ETR) Tax Rate · full year (FY26) · Medium confidence around 25%
    Yes. Our ETR has gone up to 24.5% and we expect it to be hovering around 25%. This is what we've been guiding.

    — Jayashree Satagopan, CFO

Product Launch

  • UNLOXCYT launch in U.S. Product Launch · second half of FY '26 · High confidence on track
    And we remain on track to launch UNLOXCYT in the U.S. in the second half of FY '26.

    — Dilip Shanghvi, Chairman

Product Filing

  • ILUMYA psoriatic arthritis sBLA filing Product Filing · second half of FY '26 · High confidence planning to file
    We are also planning to file ILUMYA psoriatic arthritis sBLA during second half of FY '26.

    — Dilip Shanghvi, Chairman

2 min read

Detailed narrative

Sun Pharmaceutical Industries Limited reported a strong performance for Q2 FY26, with consolidated sales reaching INR144,052 million, an 8.6% increase year-on-year. The company's gross margin stood at 79.3%, contributing to an EBITDA of INR45,271 million, a 14.9% rise from the previous year. The EBITDA margin expanded to 31.3% from 29.6% in Q2 FY25, indicating improved operational efficiency. Net profit after tax was INR31,180 million, up 2.6% year-on-year, with an EPS of INR13 per share. The effective tax rate for the quarter was 24.7%, with management guiding for it to hover around 25% for the full year, as benefits from carry-forward tax losses and facility incentives normalize.

Segment-wise, Global Innovative Medicines sales were a significant highlight, growing 16.4% to USD313 million, with U.S. Innovative Medicine sales surpassing generics for the first time. Key brands like ILUMYA, CEQUA, and ODOMZO drove this growth. The India business also performed robustly, with formulation sales of INR47,348 million, an 11% increase year-on-year, representing 32.9% of total consolidated sales. Sun Pharma maintained its number one ranking in the Indian pharmaceutical market with an 8.3% market share. In contrast, the overall U.S. business declined by 4.1% to $496 million, primarily due to lower sales in generics from increased competition and reduced lenalidomide sales. Emerging Markets and Rest of World segments showed strong formulation revenue growth of 10.9% ($325 million) and 17.7% ($234 million) respectively, driven by both generics and innovative medicines.

Strategic initiatives include continued investment in R&D, with consolidated R&D spend at INR7,827 million (5.4% of sales) for Q2 FY26. Innovative R&D accounted for 38% of the total R&D spend. The company is on track to launch UNLOXCYT in the U.S. in the second half of FY26 and plans to file ILUMYA psoriatic arthritis sBLA during the same period. Management indicated that the R&D spend for the full year FY26 is expected to be at the lower end of their 6% to 8% guidance. They also confirmed a previously stated USD100 million spend for supporting the two new launches in the current fiscal year, with costs expected to increase in Q3 and Q4.

During the Q&A, management clarified that the increase in intangible assets was primarily due to the Checkpoint acquisition (approx. $471 million) and Leqselvi-related assets. They addressed concerns about the U.S. generics business, stating their strategy is to grow both innovative and generics businesses, and confirmed an existing U.S. manufacturing footprint with openness to further expansion. The company expressed excitement about its GLP-1 compound, GL0034, with early data for MASH and diabetes, and plans for a global Phase II study. They also confirmed participation in the Indian semaglutide market upon patent expiry, aiming for a competitive pen product. While acknowledging uncertainty regarding U.S. tariffs on patent drug imports, management stated they were not among the companies receiving letters from the Trump administration and believe generics are excluded.

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