Brokerage firm Citi has cautioned that any further delay in resolving regulatory issues at Cipla's Goa manufacturing facility could severely impact the revenue potential from its chemotherapy drug Abraxane.
Abraxane, one of Cipla's key upcoming drug launches, has already been pushed to FY26 due to regulatory challenges at the Goa unit, which was expected to produce the drug. The significance of Abraxane for Cipla is underscored by the fact that it accounts for 6-7 percent of Citi's earnings-per-stock estimates for FY26/27, excluding contributions from Revlimid.
The continued delay in Cipla’s launch of Abraxane has opened the door for competitors to enter the US market, thereby reducing the drug’s revenue potential. A China-based pharmaceutical company has already received approval for Paclitaxel, the generic version of BMS' Abraxane. This makes the generic product the first interchangeable version of Abraxane, which could capture a substantial market share and drive down prices, Citi highlighted.
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Citi's note highlighted that if the price erosion happens before Cipla is able to launch its version of Abraxane, it would significantly diminish the drug's revenue potential for the company.
However, even after Citi's cautious comments, the brokerage still chose to retain its 'buy' call on Cipla, with a target price of Rs 1,870, implying a 17 percent upside from the previous close.
Also Read | Delayed drug launches to hurt Cipla’s earnings in FY24
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