Is Sun Pharmaceutical Industries Ltd. Now a Buy?

Sun Pharmaceuticals (NSE: SUNPHARMA.NS) has transformed itself into India's largest pharma company and the fifth-largest generic drugmaker in the world, through its acquisition of Ranbaxy Laboratories earlier this year.

Source: Sun Pharmaceuticals.

Although the Indian pharma market was only valued at around $12 billion in 2013, this greater penetration into rural markets is expected to drive an astounding compound annual growth rate of around 24% for the next decade, according to the Pharmaceutical Export Promotion Council on the India Brand Equity Foundation, making it one of the fastest-growing pharma markets in the world.

Sun presently owns a 9% share of the entire Indian pharma market, and the company has been seeing a CAGR of 26% in this pivotal business segment over the last decade. As a result, product sales in India now make up about a quarter of Sun's total revenues at the moment, showing its importance to the company's top and bottom lines.

The key issue to understand, though, is that Sun's own impressive CAGR to date in the Indian market essentially reflects a "rising tide lifts all boats phenomenon." As this market is projected to grow by similar levels for at least the next decade, I think there's good reason to believe this monstrous growth trend will continue to move forward, especially in light of the company's strong footprint in the country.

Is Sun a buy right now?

I think the answer is yes. The regulatory concerns raised by the FDA are issues that can be revolved in the short term, and the massive growth potential of the Indian market as a whole suggests that Sun has a long growth trajectory ahead of it.

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The article Is Sun Pharmaceutical Industries Ltd. Now a Buy? originally appeared on

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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