Why did Sun Pharma’s US formulation sales decline in Q4 FY25!

Sun Pharma’s US formulation sales declined by 2.5% year-over-year to $464 million in Q4 FY25. This decrease was primarily due to increased competitive pressures in the US generics market. The company indicated that the decline was not driven by any single product but reflected overall softer sales in January and February, which is considered a typical seasonal trend. Despite the decline, prescription and inventory trends for key brands remained strong. Additionally, the company faced exceptional restructuring charges related to its US operations but these did not specifically drive the sales decline. Overall, competitive intensity and seasonal softness were the main reasons for the fall in US formulation sales during this quarter. Sun Pharma’s US formulation sales decline in Q4 FY25 was primarily due to several specific market pressures:

• Price Erosion: A major structural challenge in the US generics market is intense price erosion. When drugs go off-patent, many competitors enter, causing prices to collapse—sometimes by over 90% within the first year. This persistent erosion affects many generic drugs that are easy to manufacture, exerting continued downward pressure on prices and revenues1.

• Increased Competition: The Q4 dip was also due to additional competition on certain products. This could be because Sun Pharma lost its 180-day exclusivity on some newly launched generics or because more firms launched competing generics against its existing products. The company noted this as “additional competition in certain products,” which is common in the highly competitive US generics market.

• Product-Specific Weakness: The decline was not broad-based across the entire portfolio but linked to certain generics facing competitive and pricing pressures. Specialty products in the US, like Ilumya and Cequa, showed growth and helped stabilize the overall business.

• Seasonal Softness: Some softness in US sales also reflected typical seasonal trends, with slower sales in January and February, which further contributed to the quarterly decline1.

• Other Challenges: Management also flagged risks from potential US pharmaceutical tariffs, currency fluctuations, and MFN pricing policies that create uncertainty in the US market, indirectly affecting revenues.

In summary, the Q4 FY25 decline in Sun Pharma’s US formulation sales was driven mainly by structural price erosion, escalated competition on generics, and product-specific challenges in a fiercely competitive environment, alongside typical seasonal softness. Meanwhile, the specialty portfolio continued to perform well, partially offsetting the negative impact. Source:FinancialTimes