Best large cap stock to buy now- Free recommendation for all readers

Sun Pharma Merger with Ranbaxy is a Game Changer

Global Pharma Industry

The market size of the global pharmaceutical industry is estimated to reach US$ 1.2 trillion by 2017 growing at a Compound Annual Growth Rate (CAGR) of 3-6% and the emerging markets are likely to be the key growth drivers. Several factors like economic growth, demographic changes, transition in community health and policy responses and focus on healthcare funding are expected to lead to double-digit growth in the pharmerging markets.On the other hand, economic and healthcare austerity measures and the savings realized from the growing availability of generic drugs, following their patent expiry, may see developed markets record low single-digit growth.

About Sun Pharma

Sun Pharma is amongst India's largest and fastest growing pharma companies. India and the US account for almost 80% of their business. In India, they are market leaders in six therapies, such as cardiology and psychiatry, with trusted brands and effective marketing teams. In the US, they are a fast growing generic company, with 250 products approved, and presence across dermatological and controlled substances. Their global manufacturing base spans 23 sites across continents. They are one of the largest spenders on generic R&D.

Earnings metrics of last 4 years

Recommendation

We recommend buying sun pharma at current CMP of 835 due to following reasons:

1) Merger with ranbaxy will atleast double the sales.Margins will not remain same as before but will show gradual improvement.

2) Synergy benefits will be huge.

3) Great management.

4) Sustainable price increases by Taro.

5) New products lined up from SPARC.

6)  Pipeline of 184 ANDAs including high-value FTFs

 Note: It should be able to give 40-50% returns in next 1 year