In a major setback to Sun Pharmaceutical Industries and its subsidiary Sun Pharma Advanced Research Company (SPARC), US health regulator revoked its approval for new drug application Elepsia XR, an antiepileptic drug. "The US Food and Drug Administration (USFDA) has issued a complete response letter (CRL) to the company's new drug application (NDA) for Elepsia XR (Levetiracetam extended-release tablets 1000 mg and 1500 mg)," SPARC said in its filing.
But Surya Narayan Patra of Phillipcapital says the news on Elepsia is more relevant to Sun Pharma. The product was linked to one of the facilities linked to USFDA issues.
Below is the transcript of Surya Narayan Patra’s interview with Sonia Shenoy and Latha Venkatesh on CNBC-TV18.
Sonia: How much of a positive impact do you think this news flow could be for Dr Reddys Laboratories?
A: In fact, more importantly, this was a kind of a big product opportunity that was expected for Dr. Reddy's since some time, but since the product was linked to one of the facility which was under issue with US Food and Drug Administration (FDA) on the quality matters, so that was impacting meaningfully its valuations and everything in the recent past. But, I think with the approval coming in for nexium, though it is not from the same facility which is under issue, but this definitely since it is a kind of USD 2 billion kind of product opportunity and Dr. Reddy's would be a fourth generic for this product for the US market. So, it is definitely a kind of a big positive development for Dr. Reddy's.
We believe in the next six months period in FY16 itself, it could be more than USD 50 million revenues it would earn.
Latha: Six months, you are expecting only USD 50 million? I mean there were some people who were expecting even USD 100 million. You think USD 50 million is conservative or that is about?
A: It is a conservative scenario. As of now two players are there in the market, Teva and Mylan but Camber is also awaited and Dr. Reddy's, they have launched. So it is what the kind of price erosion is and what kind of competition that would be there in the market - that would be the real thing. Obviously, my number is a bit conservative.
Latha: What about Sun Pharmaceutical Industries? I mean the news that came on Sun Pharma Advanced Research Company (SPARC) with the US FDA rescinding the approval given to Elepsia. Is that going to be having a profit and loss (P&L) impact on SPARC and therefore on Sun as well?
A: Not really any P&L impact for SPARC and more than SPARC, it is relevant for Sun because though Sun has not been marketing the product as of now, but this product was supposed to be manufactured at Sun’s Halol plant. And all are expecting that they are doing well on the correcting the facility issues front, at this moment, this kind of news flow is certainly a negative development for Sun because that indicates that the facility issues is likely to be there for some more time and that would be impacting the financials or particular the US funds for Sun in the near-future.
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