The outlook for Sun Pharma is expected to improve on the back of multiple positive triggers. These include scaling up of its US portfolio, expanding innovative portfolio and tariff deal/specialty drug tariff waiver. The in-licensing deal with LIB Therapeutics to commercialise and manufacture cholesterol-lowering medication lerodalcibep is also expected to strengthen its innovative medicines portfolio. While the stock has underperformed its peers sharply over the last six months, there could be some gains given the triggers and target prices. At the current price of ₹1,860, the stock is trading at 27 times its FY28 earnings estimates.
The immediate trigger for the stock is the licensing deal for lerodalcibep, which belongs to the PCSK9 class of drugs. The exclusive agreement for markets worldwide (excluding the US and China) will open up a $3.7 billion market for the company, growing at an annual rate of 38 per cent. The global PCSK9 market is expected to be about $7 billion in 2026. LIB will receive upfront and future milestone payments, together with royalties based on net sales in the licensed territories, while Sun Pharma will be responsible for pursuing regulatory approvals in licensed territories where approval has not yet been obtained.
360 ONE Capital Research says that the deal builds on Sun’s track record of strengthening its innovative portfolio through in-licensing and acquisitions. Sun’s FY26 innovative medicines grew by 16.8 per cent to $1.42 billion. Plaque psoriasis drug Ilumya, which is the largest product, reported sales of $796 million in FY26 and grew 17 per cent Y-o-Y.
Near-term catalysts, according to Robit Bhat and Hrishikesh Patole of the brokerage, include the potential USFDA approval of Ilumya for psoriatic arthritis alongside the continued ramp-up of hairfall (alopecia areata) drug Leqselvi and skin cancer formulation Unloxcyt. Combined with the proposed $12 billion Organon acquisition, which adds scale across innovative medicines, women’s health and biosimilars, and strong India growth, the company, according to the brokerage, is building a broader platform for sustained growth. It has a ‘buy’ rating with a target price of ₹2,250.
The other trigger is the tariff deal with the US, which extended the most favoured nation drug pricing to state Medicaid programmes. In a positive, the arrangement, according to Kotak Research, excludes Medicare, which, along with the commercial channel, accounts for the vast majority of Sun Pharma’s innovative medicine sales. The deal also provides tariff protection for Sun’s US branded portfolio until January 20, 2029. The company’s proposed acquisition (expected to be completed by early 2027), Organon, is outside the scope of the deal and it would need to negotiate a separate agreement. While lower Medicaid pricing is likely to weigh on earnings, the exclusion of Medicare and the tariff reprieve make the overall outcome marginally positive for Sun Pharma, says the brokerage. It has an ‘add’ rating with a target price of ₹2,150. The specialty drug tariff waiver for specific medications will also help eliminate and lift the overhang of tariffs.
Geojit Research is also positive on the outlook for Sun Pharma. The recent approval of semaglutide in multiple markets, steady performance of its flagship brands such as Ilumya and progress in the commercialisation of new specialty products highlight its focus on innovation-led growth, says the brokerage. The proposed Organon acquisition is expected to broaden its therapeutic presence through the women’s health and biosimilars portfolios while further enhancing its global reach. It has retained a ‘buy’ rating on the stock with a revised target price of ₹2,070.
