Zydus, Lupin seen weathering generic Myrbetriq court loss, says Elara report

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Zydus Lifesciences and Lupin are unlikely to face significant valuation impacts despite a US court ruling against them in a patent dispute over the generic version of Astellas Pharma Inc.'s bladder drug Myrbetriq, according to the latest report by Elara Capital.

Myrbetriq is a medication used to treat overactive bladder that lea.

A U.S. District Court recently ruled against Zydus and Lupin, finding Astellas's patent for Myrbetriq was not invalid. Both Indian drugmakers have been selling their generic versions of Myrbetriq "at risk" in the U.S. since the first quarter of fiscal year 2025.

Despite the adverse judgment, neither company has stopped selling the product, signaling confidence in their legal arguments of non-infringement or invalidity. Elara notes the situation is ongoing, with potential for an injunction motion from Astellas and a consolidated jury trial scheduled for calendar year 2026 to address infringement and other invalidity claims. Both Zydus and Lupin could also appeal the verdict.

Elara Capital views generic Myrbetriq as a "one-off opportunity" and believes it hasn't been assigned a full multiple in the companies' valuations. Therefore, even if the estimated $150-300 million in FY25 revenue from the drug is lost, the brokerage firm's target prices, based on FY27 estimates, remain largely unchanged. However, Elara cautions that FY26 earnings per share could see impacts of 20-25% for Zydus and 10-15% for Lupin if the product is withdrawn.

While the companies face potential liability for damages if they ultimately lose the patent battle, Elara considers the risk of triple damages "farfetched," citing a lack of precedent in similar generic drug cases. Most such cases are settled for amounts lower than the innovator's claimed lost profits, the report states.

Following stock price corrections of 6.9% for Zydus and 3.9% for Lupin on April 16 after the news, Elara sees limited further downside. The brokerage maintains a Buy rating on Zydus Lifesciences with a price target of Rs. 1,311 and an Accumulate rating on Lupin with a price target of Rs. 2,392.