Sun Pharma is the excellent pick in the Pharma space. It is constantly showing a CAGR of 35% for the last 4 years. It has a simultaneous focus in two main areas.

In Domestic sector it has a clear focus on the chronic disease segment and speciality products.

In International sector it is a aggressive player with a number of ANDA (Abbreviated New Drug Applications) filing in US. Sun has filed 27 products in US already they have a lot of products in the pipeline and they hope to have 100 products by 2009. They operate independently as well as through Caraco, its 100% Subsidiary in US. In the International scene they have complex products like Nasal Sprays, Injectibles which will be difficult to imitate immly. It has also exports in niche segments such as anti cancer, seroids, hormones et, which are very complex products and will wardoff competition to some extent.

Recently they have also acquired facilities in Ohio, Hungary and New Jersy where entry barriers are also quite high.and there will be substantial revenue contributions from these acquisitions.

As it is already known, they are demerging the R&D business which will unlock values.The proposed demerger may happen in March 2007.

Apart from the domestic and international sales they expect growth also from non-US formulations and bulk exports.

As regards the financials , it shows a constant increase in sales. The ROE and ROCE also is very comfortable. Constant increase in sales is a very healthy sign for any company.

Year                         Sales in Cr             ROE                  ROCE         PAT margin

Fy-2005                      1143.3                 40.5                     16.6           34.7

Fy-2006                      1594.5                41.4                     12.5            36.0

FY-2007 Estimated    2040.4                37.6                     15.2             35.3

It has not liquidated its equity in the last two years. The promoters shareholding is 71%. FII holding is 16%. Shares with Public is only  7%.

Since 15% of my portfolio is having pharmaceutical shares, I constantly keep a watch on the developments

In Pharmaceutical Industry.  In my opinion out of the four leading players in the Indian Pharmaceutical scene, (Cipla, DRL,Ranbaxy and Sun), Sun Pharma is best placed among all. Though in the upside

Ranbaxy may go to a  higher level percentage wise over Sun Pharma, the latter is the best one to go for in Pharmaceutical sector.