How generic asthma drug could 'change the face of Cipla'

Moneycontrol BureauOn Monday, Mumbai-based generic drugmaker Cipla launched the aerosol copy of GlaxoSmithKline’s anti-asthma inhaler Adviar in two small European markets – Germany and Sweden – but the move could potentially serve as a precursor to a crack at more lucrative markets such as the US and the UK.Adviar is the fourth-largest-selling drug in the world and comes in two forms: powdered (dry powderered inhalers, or DPI) and spray (multi-dose inhalers). Last year, the drug notched up sales of USD 8.25 billion for GSK. It lost patent protection in 2012.The immediate addressable opportunity for Cipla remains small. According to a Bank of America-Merrill Lynch report, sales for MDI stood at USD 40 million and USD 20 million for Germany and Sweden, respectively, but Cipla has applied for approvals for 10 markets in Europe, including in the UK, where the market size stands at USD 432 million.In an interview with Bloomberg recently, Cipla chairman Yusuf Hamied had said it was hoping to get approval from UK as early as end of the year.The overall market for Advair is USD 2.4 billion in Europe – of which a third is from the MDI version.“This is a significant development for Cipla as it instills the confidence that time has come for the company to monetize its respiratory franchise in the developed markets,” BoA-ML said in its report. “We believe Advair MDI will remain a limited-competition opportunity for a prolonged period.”It added that even if the generic launch results in a 30 percent price erosion and provides a 30 percent market share for Cipla, sales of about USD 150 million (or Rs 900 crore) could accrue for the company.According to the brokerage, this implies a net present value of Rs 70 per share for the company, which notched up net profits of Rs 1,416 crore on sales of Rs 10,100 crore last year.The greater promise, however, lies in the lucrative US market where Cipla plans to submit an application this year. For long, Cipla has been strait-jacketed as an emerging-markets player even as it shot to fame – and some controversy – when US Big Pharma criticized it for selling anti-AIDS drugs in Africa for less than a hundredth of what they sold for.Hamied told Bloomberg he was aiming to increase the company’s revenues from the US market from 9 percent currently to 20 percent by 2020. For this, generic Advair remains a key goal the Indian drugmaker will need to achieve – “it will change the face of Cipla,” the chairman told the news agency – even as analysts believe a US launch could be some years away.But already, Cipla faces competition from a rival drugmaker, Mylan, which plans to file an application for the copy and is aiming to launch by 2016.