Sun Pharma Shares Fall The Most In Six Weeks After Concert Pharma Bid
Brokerages sees the acquisition of Concert Pharmaceuticals for $576 million as a positive for Sun Pharma.
Shares of Sun Pharmaceutical Industries Ltd. fell the most in six weeks after the company said it would buy Concert Pharmaceuticals Inc. for $576 million (around Rs 4,680 crore) in equity value.
Concert is an American clinical biopharmaceutical company with an extensive patent portfolio, including the potential treatment of an autoimmune hair loss disease called Alopecia Areata.
The transaction has been approved by the boards of directors of both companies, as disclosed in Jan. 19 exchange filing, and is expected to be completed in the first quarter of 2023.
While brokerages tracked the development as a positive for the company, shares of the company dropped after the acquisition was announced.
Shares fell as much as 2.3% to Rs 1,016.85 apiece intraday, before closing 0.8% lower on Friday.
Through this acquisition, Sun Pharma has added Deuroxolitinib to its specialty portfolio, which is an immune-modulating medication, according to Motilal Oswal. "The deal further enhances specialty offerings by Sun Pharma in the dermatology space," it said.
The brokerage maintained its 'buy' rating with a target price of Rs 1,200, implying an upside of 15%.
Jefferies, too, said that its preliminary analysis suggests clinical trial for the product is "encouraging" and the product brings in long-term growth visibility for Sun Pharma. "Sun Pharma is looking to file the new drug application for Deuruxolitinib in the first half of FY23, we believe the product could get commercialized by FY25."
It has an identical rating and target price on the company.
Of the 45 analysts tracking the company, 41 maintain a ‘buy’, three suggest a ‘hold’ and one recommends 'sell', according to Bloomberg data. The average of the 12-month target prices implies an upside of 12.2%.