Maintain 'buy' on Sun Pharma – TP Rs.757 - Geojit BNP Paribas

- Buy rating on Sun Pharma is retained with the target price of Rs.757 over one year.

- J&J (Johnson & Johnson) has said that it has restored supplies of Doxil (doxorubicin Hcl) in the US with immediate effect.

- Doxil is a type of chemotherapy drug with sales of USD250m.

- Last year, J&J's manufacturing partner faced manufacturing deficiencies leading to a drug shortfall in the market. The FDA started sourcing Doxil from Sun to meet the shortfall.

- J&J was expecting to re-enter the market with full supplies only in late 2012. However the entry comes slightly earlier than anticipated.

- Doxil has emerged as a key product for Sun this year and it is estimated that it would have sales of USD60m-70m in 1Q FY13 and built in sales of USD110m for FY13.

- A material revision in the FY13 forecast for Doxil is not expected.

- The earlier than expected re-launch of Doxil by J&J is unlikely to have a material impact on Sun's FY13 earnings.

- However, the stock may correct a bit, given its recent outperformance.

- Any stock correction should be used as a buying opportunity as Sun's core business remains strong.

Source : Equity Bulls

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