The Silent Strategist: How Dilip Shanghvi is future-proofing Sun Pharma

Dilip Shanghvi is not one for flamboyant statements or headline-grabbing moves. Yet, over the decades, the soft-spoken Chairman & Managing Director of Sun Pharma has turned the company from a small maker of generics into a global pharmaceutical giant with a revenue of $5.8 billion.

While Sun Pharma built its name in generics, it is now betting on specialty drugs, also called innovative drugs, a segment that already accounts for a fifth of its turnover. These are high-value, patent-protected medicines that treat complex conditions, unlike generics, which are mass-market, off-patent medicines. These often require extensive research and clinical trials, making them more expensive but also more effective.

But the journey will be tough. The once lucrative US generics market has become volatile with threat of reciprocal tariffs by the Trump government, price erosion, consolidation, and regulatory scrutiny. Also, increased competition, price caps, and consolidation among large buyers are squeezing manufacturers’ margins. Sun Pharma, too, felt the heat. In the third quarter of FY18, the company’s US sales dropped by 35%, primarily because of pricing pressure in the US generics market and a dip in sales of some generic products. Shanghvi, 69, saw the storm coming. Over the past decade, he has repositioned Sun Pharma, diversifying its revenue streams by adding innovative drugs in its product portfolio in the dermatology, ophthalmology, and onco-dermatology segment and continuing to expanding in India and emerging markets

Bet On Specialty Drugs

Now, as Sun Pharma continues its transition, Shanghvi is playing the long game—investing more in R&D and scouting for acquisitions and licensing deals in specialty drugs. The strategy is paying off but challenges such as global economic uncertainties and foreign exchange fluctuations remain.

Yet, the next phase of growth is taking shape. In FY24, Sun Pharma’s consolidated revenues grew 10.4% to Rs 47,800 crore, while Ebitda increased 11.8% to Rs 13,000 crore. Adjusted net profit rose 16.5% to Rs 10,100 crore. At the same time, it has significantly increased investments in specialty R&D. Spending on R&D in the segment was Rs 1,228 crore ($148 million) in FY24, up from Rs 540 crore ($65 million) in FY20, accounting for 78% of the total increase in R&D expenditure over the period. Over the past five years, Sun Pharma has reported a 10.7% compound annual growth rate (CAGR) in revenues.

“Our global specialty business has been a key growth driver, contributing one-fifth of Sun Pharma’s global revenues,” says Shanghvi. The specialty segment’s share has increased from 8% in FY19 to 18% in FY24. “Our focus remains developing a global pipeline of patented products and improving patient outcomes through innovative dosage forms,” he adds. Sun Pharma’s domestic business has grown at a CAGR of 15.2% over the past five years, supported by an expanded field force. “The field force expansion has helped us declutter our portfolio and improve penetration in smaller markets,” says Shanghvi.

In the US, Sun Pharma has increased the contribution of specialty products while strengthening its generics business through new product launches and market share gains. “We lost nearly a billion dollars in top line due to pricing pressures in the US. This also affected profitability. To mitigate this, we developed new revenue streams, one from the specialty segment and the other from expansion in emerging markets and India,” says Shanghvi.

The Winning Formula

The shift is part of a long-term strategy. “A decade ago, we decided to invest in building a portfolio of innovative medicines to move up the value chain,” says Shanghvi.

Sun Pharma is also focusing on complex generics and high-entry-barrier segments to address pricing challenges in the US generics market. Complex generics involve intricate formulations such as inhalers, injectables, or controlled-release drugs, making them harder to replicate. “Our focus on solving complex problems allows us to bring differentiated products to the market faster,” says Shanghvi. One such area is GLP-1 inhibitors. Glucagon-like peptide-1 (GLP-1) inhibitors are a class of drugs primarily used to manage Type-II diabetes and obesity by mimicking the natural GLP-1 hormone. Sun Pharma is also developing a generic version of Semaglutide for the India market which is under clinical evaluation, says Shanghvi.

These drugs help regulate blood sugar levels by stimulating insulin secretion, reducing glucagon production, slowing gastric emptying and suppressing appetite. As a result, they not only improve glycaemic control but also contribute to weight loss, making them increasingly relevant in the treatment of metabolic disorders. Beyond diabetes management, these drugs are being studied for cardiovascular benefits, prompting pharmaceutical companies, including Sun Pharma, to invest in R&D in this area. The soaring global demand for weight-loss drugs like Ozempic and Wegovy has made GLP-1 inhibitors a multibillion-dollar opportunity.

Sun Pharma is also advancing its R&D pipeline with six new active substances at various stages of clinical trials. “We are encouraged by the progress of these molecules,” says Shanghvi. The company has also built a cash reserve of close to $3 billion that it intends to use for acquisitions and licensing opportunities.

Weathering the Storm

Beyond specialty products, the company remains committed to improving access to medicines in India. “Ensuring wider availability of medicines and patient compliance is important for India’s health security,” says Shanghvi. The growth has come despite a challenging global environment. “Current geopolitical issues are creating uncertainties around supply chains, inflation, and overall economic conditions,” he says. Additionally, pricing pressures in the US generics market, driven by customer consolidation and competition, remain a concern. “There is also uncertainty around tariffs in the US,” he says. Foreign exchange volatility, particularly in emerging markets, could also impact reported growth. “Even if these markets are growing in local currency terms, forex fluctuations can affect the overall performance,” he says.

However, Sun Pharma is focused on addressing complex challenges and maintaining competitiveness. “We have always approached our business with the mindset of competing with the larger players. In generics, we grew by expanding steadily. In the global specialty business, despite exceeding $1 billion in annual revenue, we remain relatively small, which allows us to be nimble and adapt quickly,” says Shanghvi. “Our ability to improve consistently has helped us grow faster than the industry. That will remain our approach,” he adds.

Sun Pharma’s growth outlook remains stable, with Nirmal Bang Equities projecting a 10% CAGR in revenue, 12% in Ebitda, and 20% in net profit over FY24-27 supported by expansion of its specialty pipeline and steady domestic performance. The brokerage says “while near-term concerns, including additional costs and revenue impact from the Halol import alert and Mohali plant issues, as well as increased R&D expenses and slightly reduced topline growth, persist, we remain confident of Sun Pharma’s long-term growth trajectory.” These issues stem from US Federal Drugs Administration inspections that flagged quality concerns, temporarily restricting exports from these facilities.

The report says the global specialty segment is expected to grow at a 14.5% CAGR, driven by “continued ramp-up in Winlevi and Ilumya, which will be partially offset by heightened generic competition in Absorica.” Sun Pharma’s India business grew 14% YoY primarily due to “55% growth from new products and volume expansion and 45% from price adjustments.” The report says “the Ebitda margin is expected to remain around 28%, with return on equity (RoE) and return on capital employed (RoCE) at 17.7% and 16.2%, respectively, by FY27.” Ebitda reflects profitability before interest, tax and depreciation costs, while RoE and RoCE measure how efficiently a company generates returns.

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