Jubilant Life up 5%, Fitch sees earnings boost from radiopharma

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Fitch Ratings says it expects Jubilant Pharma's credit profile to benefit from new long-term contracts for its radiopharma business with leading US distributors. It assigned BB- rating with stable to the company.

Jubilant Pharma (JPL) is a wholly-owned subsidiary of listed entity Jubilant Life Sciences that rallied more than 5 percent intraday.

The subsidiary through one of its units Jubilant DraxImage Inc. Montreal Canada (JDI) has signed long term contracts with distribution networks in the US, for supply of nuclear pharmaceutical products used for various diagnostic and therapeutic procedures for thyroid, myocardial perfusion, lung, kidney and bone scans.

The contracts are effective for 39 months from January 2017.

Jubilant Pharma's radiopharma business - a key constituent of its speciality pharma portfolio - has a good market position in the US with a niche product portfolio.

The company has limited competition for many of its radiopharma products, which is reflected in the length of the supply contracts, says the rating agency which believes the contracts' long tenure supports the company's earnings visibility and credit profile.

Fitch says the supply contracts do not include Ruby-Fill, which is used in heart imaging and is one of the important new products in Jubilant Pharma's radiopharma business, as the company aims to sell the product directly to maximise its earnings potential.

Jubilant Pharma received approval from the US Food and Drug Administration for Ruby-Fill in October 2016 and anticipates commercial sales to begin in the fourth quarter of the financial year ending March 2017.

The drug is used for positron emission tomography (PET) imaging of the myocardium under rest or pharmacologic stress conditions to evaluate regional myocardial perfusion in adult patients with suspected or existing coronary artery disease.

Overall, Fitch views the company's new launch pipeline in radiopharma favourably, due to Jubilant Pharma's focus on niche products with limited competition.

At 10:49 hours IST, the stock was quoting at Rs 717.10, up Rs 22.20, or 3.19 percent on the BSE.Posted by Sunil Shankar Matkar