Sun Pharma Vs Torrent Pharma: The world is continuing to face the wrath of the Covid-19 pandemic as new variants keep emerging. This period has made the healthcare sector a priority in every country.
This has benefitted not only the people but also the companies engaged in the industry. In this article, we will take a look at two pharma giants Sun Pharma Vs Torrent Pharma.
Table of Contents
Industry Overview
The Indian pharmaceutical market (IPM), which is valued at more than $20 billion has demonstrated its resilience in 2020-21 during the pandemic.
India is the world’s third-largest provider of generic medicines by volume, with a 20% share of total global pharmaceutical exports.
A generic medicine is designed to be identical to branded drugs, marketed by private companies in dosage form, strength, safety, route of administration, performance characteristics, quality, and intended use.
The Generic pharmaceuticals market is expected to reach $331.54 billion in 2024-25 at a CAGR of 7.8%. Last year, the government launched a Rs 3,000 cr scheme for setting up bulk drug parks.
It has also announced a production-linked incentive scheme of Rs 6,940 cr, targeting domestic manufacturing of 53 APIs with high dependence on imports.
Apart from this, in Feb 2021, the cabinet also approved a production-linked incentive scheme for the pharma sector, entailing an outlay of Rs 15,000 cr.
About The Company
Sun Pharmaceutical Industries Limited
Sun Pharmaceutical Industries Limited is an Indian multinational pharmaceutical company. It is a leading specialty generics pharmaceutical company with a strong presence in India and the US markets.
As per SMSRC data for February 2021, Sun Pharma is ranked No. 1 by prescriptions with 10 different classes of doctors.
It is also the largest pharma company in India and the fourth largest specialty generic pharmaceutical company in the world.
The products cater to a vast range of therapeutic segments covering psychiatry, anti-infectives, neurology, cardiology, orthopedic, diabetology, gastroenterology, ophthalmology, nephrology, urology, dermatology, and gynecology, respiratory, oncology, dental and nutritional.
Torrent Pharmaceuticals Limited
Torrent Pharma, an Indian multinational pharmaceutical company is the flagship company of the Torrent Group. It is one of the leading pharma companies in India.
It has a strong international presence across more than 40 countries with operations in regulated and emerging markets.
Torrent Pharma is active in the therapeutic areas of cardiovascular (CV), central nervous system (CNS), gastrointestinal, diabetology, anti-infective, and pain management segments.
It has also forayed into the therapeutic segments of nephrology and oncology while also strengthening its focus on gynecology and pediatric segments.
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Sun Pharma Vs Torrent Pharma: Revenue
In FY21, Sun Pharma’s formulation sales stood at ₹103 Billion, up 6.5%, and accounted for about 31% of overall revenues.
However, revenues in the US business declined by approx. 4% to ₹101 Billion which makes about 30% of their total consolidated revenues.
Torrent Pharmaceuticals earned a revenue of Rs 8,005 crores in 2020-21. It witnessed a significant improvement across operating and net earnings 11% and 22% Y-o-Y respectively.
This was complemented by pandemic-led cost savings, productivity improvements, and operating leverage.
| Revenue | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Sun Pharmaceutical (Rs in Cr) | 31,578 | 26,489 | 29,066 | 32,838 | 33,498 |
| (Revenue growth in %) | 10.85% | -16.12% | 9.73% | 12.98% | 2.01% |
| Torrent Pharmaceuticals (Rs in Cr) | 5,816 | 5,950 | 7,673 | 7,939 | 8,005 |
| (Revenue growth in %) | -13.03% | 2.31% | 28.96% | 3.47% | 0.83% |
Sun Pharma Vs Torrent Pharma: Profit Margins
The gross profit margin of Sun Pharma has been fluctuating over the last 5 years. On the other hand, Torrent Pharma has seen a rising trend in its gross profit margin in the last 3 years.
The operating profit margin shows how much the company is making from its core business activities.
Sun pharma has seen a fluctuation in its operating profit margin whereas Torrent Pharma has seen an improving margin in the last 3 years.
The net profit margin of both companies is low. However, Torrent pharma has had a better margin than Sun Pharma in the last 3 years.
| Profit Margin ratios | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Gross Profit Margin (%) | |||||
| Sun Pharmaceutical | 34.21 | 24.4 | 25.22 | 23.22 | 27.84 |
| Torrent Pharmaceuticals | 27.52 | 27.54 | 26.58 | 28.86 | 31.75 |
| Operating Margin (%) | |||||
| Sun Pharmaceutical | 30.17 | 18.72 | 19.19 | 16.97 | 21.63 |
| Torrent Pharmaceuticals | 22.24 | 20.71 | 18.53 | 20.62 | 23.54 |
| Net Profit Margin (%) | |||||
| Sun Pharmaceutical | 24.82 | 5.02 | 5.7 | 7.05 | 3.72 |
| Torrent Pharmaceuticals | 15.94 | 6.02 | 3 | 6.85 | 8.41 |
Sun Pharma Vs Torrent Pharma: Investor’s Earnings
The Return on Equity ratio shows the efficiency with which the company is able to generate profits. Sun Pharma has a lower ratio as compared to Torrent Pharma because the former has earned fewer profits.
The ROCE metric considers both Debt and Equity in relation to the net income earned by the company. Torrent Pharma has a higher 5-year average ROCE of 15.37% compared to Sun pharma with 10.86%.
The Earnings per share of Torrent Pharma are higher than Sun pharma with an increasing trend over the last 5 years.
The dividend yield measures how much the company is paying out relative to its stock price. Both the companies have seen a fluctuation in the ratio over the last 5 years.
| Return ratios | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Return On Equity (ROE) | |||||
| Sun Pharmaceutical | 22.51 | 6.85 | 8.05 | 9.66 | 4.98 |
| Torrent Pharmaceuticals | 23.8 | 15.12 | 9.34 | 21.47 | 23.49 |
| Return On Capital Employed (ROCE) | |||||
| Sun Pharmaceutical | 21.48 | 8.4 | 8.68 | 10.07 | 5.66 |
| Torrent Pharmaceuticals | 20.36 | 13.81 | 9.75 | 15.28 | 17.63 |
| Earnings Per Share (EPS) | |||||
| Sun Pharmaceutical | 2.9 | 0.87 | 1.11 | 1.57 | 1.21 |
| Torrent Pharmaceuticals | 55.16 | 40.07 | 25.78 | 60.55 | 73.97 |
| Dividend Yield | |||||
| Sun Pharmaceutical | 0.51 | 0.4 | 0.57 | 1.14 | 1.26 |
| Torrent Pharmaceuticals | 0.9 | 1.12 | 0.87 | 1.62 | 1.38 |
Sun Pharma Vs Torrent Pharma: Valuations Of The Company
The sectoral PE for both companies is 35.66. The TTM PE of Torrent Pharma is 38.69 and that of Sun Pharma is 34.20. Therefore, it is safe to say that Torrent Pharma is more overvalued than Sun pharma.
The P/B ratio measures the market’s valuation of a company relative to its book value. A lower ratio is considered better.
Similar to the P/B ratio, a lower EV/EBITDA is considered better. Sun pharma has a lower ratio than Torrent Pharma.
| Valuation Parameter | |||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2019 | 2020 | 2021 | |
| Price to Earnings Ratio (PE) | |||||
| Sun Pharmaceutical | 23.69 | 56.72 | 43.14 | 22.44 | 49.38 |
| Torrent Pharmaceuticals | 28.09 | 31.14 | 75.73 | 32.56 | 34.35 |
| Price to Book Value (P/B) | |||||
| Sun Pharmaceutical | 4.5 | 3.1 | 2.78 | 1.87 | 3.09 |
| Torrent Pharmaceuticals | 6.03 | 4.57 | 6.99 | 6.92 | 7.37 |
| EV/EBITDA | |||||
| Sun Pharmaceutical | 14.91 | 18.51 | 16.12 | 11.32 | 15.1 |
| Torrent Pharmaceuticals | 17.39 | 16.21 | 18.75 | 16.82 | 18.6 |
Shareholding Pattern In The Company
Future Prospects
Sun Pharmaceutical: It is growing its portfolio of specialty products, branded generics, and pure generics across 100+ countries globally.
Along with that, the company is also focused on both organic and inorganic growth, with the proactive acquisition of businesses and in-licensing of specialty molecules.
The company’s strong positioning in the global generics industry and continued investments for the future will ensure that it remains a prominent player in the space.
Torrent Pharmaceuticals: Among other things, the company wants to improve patient lives through strong R&D and the highest product quality.
Torrent Pharma continues to emphasize chronic therapies as its main area of focus and hopes to continue gaining market share in key sub-therapies.
Apart from this, the company is also actively looking for opportunities in three major markets i.e, US, Germany, and Brazil.
In Closing
In this article, we looked at two of the biggest Pharmaceutical companies in India. Both the companies are giving neck-to-neck competition with each other.
However, future leadership will depend on the strategies adopted by the companies in the coming years. That’s all for this post on Sun Pharma Vs Torrent Pharma.
Have you invested in either of the pharma giants? Let us know in the comments below.
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