SPARC - SPARC

📊 NSE: SPARC 🏢 Miscellaneous 📅 Last Updated: 12/14/2025 13:36

💰 Financial Performance

Revenue Growth by Segment

Total revenue declined by 68.3% YoY to INR 75.55 Cr in FY24 from INR 238.78 Cr in FY23. Revenue is primarily derived from license fees, royalties, and R&D services. 9MFY25 revenue stood at INR 44.58 Cr, a 24.4% decrease compared to INR 58.99 Cr in 9MFY24, driven by a decline in license fees and the failure of the Proseek study.

Geographic Revenue Split

While specific SPARC geographic splits are not detailed, the company operates R&D centers in Mumbai and Vadodara (India) and New Jersey (USA). Its primary licensing partner, Sun Pharma, generates 65% of its consolidated revenue from overseas markets, including the USA, Europe, and emerging markets.

Profitability Margins

The company reported an operating loss of INR 387.22 Cr in FY24 compared to a loss of INR 222.58 Cr in FY23, resulting in a negative operating margin exceeding 500%. Net worth deteriorated by 75.5% to INR 125.57 Cr as of March 31, 2024, from INR 512.43 Cr in the previous year due to sustained R&D losses.

EBITDA Margin

EBITDA remains deeply negative due to the capital-intensive nature of R&D. Operating losses increased by 74% YoY in FY24. For 9MFY25, losses stood at INR 282.74 Cr, nearly flat compared to INR 281.42 Cr in 9MFY24, reflecting high fixed costs for clinical trials and workforce compensation.

Capital Expenditure

SPARC received INR 703 Cr in January 2023 through the conversion of warrants to fund R&D. The company has obtained shareholder approval to raise up to INR 1,800 Cr via fresh equity issuance to shore up its capital base and fund ongoing clinical trials.

Credit Rating & Borrowing

The company holds an ACUITE AA | Stable rating for its INR 200 Cr bank facilities. Borrowing costs are supported by a corporate guarantee from Shanghvi Finance Private Limited (SFPL). Total debt increased to INR 61.15 Cr in FY24 from INR 15.68 Cr in FY23, raising the gearing ratio from 0.03x to 0.49x.

⚙️ Operational Drivers

Raw Materials

The primary 'inputs' are a highly qualified scientific workforce (compensation) and clinical trial materials/services, which constitute the bulk of the R&D expenditure. Specific chemical raw material percentages are not disclosed as the company is clinical-stage, not a mass manufacturer.

Import Sources

R&D activities and clinical trials are conducted across India and the USA, with specialized materials sourced globally to meet USFDA and other regulatory standards.

Key Suppliers

Not specifically disclosed; however, the company utilizes specialized Contract Research Organizations (CROs) and clinical trial sites globally.

Capacity Expansion

SPARC operates R&D centers in Mumbai and Vadodara, India, and an office in New Jersey, USA. Expansion is focused on the pipeline rather than physical manufacturing, with 5 products in various clinical stages and 10+ pre-clinical assets.

Raw Material Costs

R&D costs are the primary driver of the cash flow mismatch. In FY22, operating losses were INR 186.75 Cr against revenue of INR 137.25 Cr, indicating that R&D and clinical costs regularly exceed 200% of annual revenue.

Manufacturing Efficiency

Not applicable as a clinical-stage company; efficiency is measured by the progression of assets through clinical phases (Phase I to III) and successful USFDA filings.

Logistics & Distribution

Distribution is handled by licensing partners. For example, Sezaby commercialization rights in the US were licensed to Sun Pharmaceutical Industries Inc. for an upfront payment of $10 million.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth is targeted through the commercialization of the R&D pipeline, specifically NCEs (New Chemical Entities) and NDDS (New Drug Delivery Systems). The strategy includes signing licensing agreements for milestone payments and royalties, and potentially exploring a services model to leverage discovery capabilities.

Products & Services

Sezaby (phenobarbital sodium for neonatal seizures), technology licenses, and R&D services in Oncology, Neuro Degeneration, Ophthalmology, and Dermatology.

Brand Portfolio

SPARC, Sezaby.

New Products/Services

Pipeline includes 5 products targeting epilepsy, glaucoma, cancer, and Parkinson's disease, plus 10+ pre-clinical assets. Sezaby recently transitioned to commercialization via Sun Pharma.

Market Expansion

Focus is on the US market for specialty medications and global licensing. The company is evaluating a shift toward a 'NewCo' creation model for specific programs to de-risk development.

Market Share & Ranking

First listed pharma R&D company in India. Sun Pharma (parent/partner) is the 4th largest specialty generic company in the USA.

Strategic Alliances

Key alliance with Sun Pharmaceutical Industries Limited (SPIL) for commercialization and a collaboration with UCSF (University of California, San Francisco) for early-stage research.

🌍 External Factors

Industry Trends

The pharmaceutical R&D industry is shifting toward specialty medications and NCEs. SPARC is positioned in high-growth areas like Oncology and Neuro Degeneration, though it faces high risks associated with long gestation periods (5-10 years per drug).

Competitive Landscape

Competes with global biotech and specialty pharma companies like Merck, Sanofi, and Dr. Reddy's. Competition is based on clinical efficacy and time-to-market.

Competitive Moat

Moat is built on a robust patent portfolio, a pipeline of 15+ assets, and the financial backing of the Sun Pharma Group. Sustainability depends on successful clinical outcomes and the ability to raise capital during long gestation periods.

Macro Economic Sensitivity

Highly sensitive to global healthcare funding and regulatory environments. Inflation in clinical trial costs and specialized labor directly impacts the burn rate.

Consumer Behavior

Demand is driven by unmet medical needs in chronic and life-threatening diseases (e.g., Parkinson's, Cancer).

Geopolitical Risks

Trade barriers or regulatory changes in the US (USFDA) are critical, as the US is the primary target market for SPARC's innovative products.

⚖️ Regulatory & Governance

Industry Regulations

Strict adherence to USFDA and Indian regulatory standards for clinical trials, product safety testing, and manufacturing quality is mandatory. Any regulatory action can impair the value of products under development.

Environmental Compliance

ESG risks include hazardous substance release and toxic greenhouse gas emissions. Compliance is critical for maintaining R&D licenses in India and the USA.

Taxation Policy Impact

Not specifically detailed, but the company incurs losses, resulting in deferred tax assets rather than immediate tax liabilities.

Legal Contingencies

The company faces inherent legal risks associated with patent filings and clinical trial compliance. While specific pending court case values are not listed, regulatory setbacks are identified as a primary rating sensitivity.

⚠️ Risk Analysis

Key Uncertainties

The primary risk is the failure of clinical trials (e.g., Proseek), which can result in a 100% loss of investment for that specific asset. Long gestation periods create a permanent mismatch between R&D spend and revenue generation.