Tuesday, August 14, 2012

largest m-cap growth by steven philip warner

Despite litigations, Sun Pharmaceuticals has managed to give its investors the largest m-cap growth by steven philip warner
 
Over the past half-a-decade, Sun Pharma has outperformed the Sensex by 168.65%, while it outdid the Nifty by 170.71%. There is certainly more to just profits that has made Sun Pharma gain a literal “Hold” call for many years now, as Baldota says, “We work towards maximizing ‘long term’ shareholder wealth. In our history, any shareholder who has held on to Sun Pharma shares for typically over two years, has seen positive returns.” Sun has a base of 8000 multi-cultural employees – arguably the largest amongst all drug makers in the country.

But Sun Pharma has gone against global statistical research and claims that it has always kept R&D and quality control on top of its priority list. Since FY2002-03, the company has consistently spent anywhere between 8% to 13% of its annual turnover on R&D. Till date, Sun has filed for 233 patent applications, with a success rate of 33%. To ensure quality, the company has quality centres placed at six USFDA & German approved plants across the country. During the past financial year, the company introduced 42 new products. Strangely, the company was also involved in providing healthcare, education, disaster relief and utilities in the country – in other words, CSR, an area which modern management theorists advise a corporation to stay away from, as investments in CSR definitely reduce shareholders’ wealth.

But Baldota defends, “It’s difficult to attribute price changes of the stock to something very specific, but suffice to say that our consistent message to our investors has been that we create lasting value. Exceeding shareholders expectations requires as a necessary condition that all stakeholders feel proud of their being a part of Sun.”

Baldota’s statements could have been easily relegated by any critical analyst as being plain marketing speech, if it were not for the 2010 report by HDFC Securities, which confirms that now Sun Pharma’s addressable market size is all set to touch $12.6 billion by 2011!


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