Shares of Divis Laboratories fell as much as 4 percent to Rs 6,545 on Monday, July 14, after a key legal setback over the weekend raised concerns about the company’s future revenue stream from one of its most important products.
Indian drugmaker MSN has reportedly won a patent litigation battle involving Entresto, the blockbuster heart failure drug marketed by Novartis. The ruling clears the way for MSN to launch a generic version in the US as early as July 15, 2025 — a development that casts a shadow over Divi’s custom synthesis business, where Entresto's API is a significant revenue contributor.
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Entresto is believed to be crucial in Divi’s innovator-led custom synthesis portfolio, accounting for nearly 40 percent of that segment’s revenues. Analysts estimate that it makes up close to a fifth of the company's overall topline, making the ruling a potential earnings disruptor.
Brokerage IIFL Securities has flagged that this patent expiry could shave off 12–13 percent from Divi’s EBITDA in the coming year. The firm has maintained a "reduce" rating on the stock, assigning it a target price of Rs 5,465 — implying a downside of around 20 percent from current levels.
The pharma player reported a 23 percent jump in net profit for the three months ended March at Rs 662 crore. The firm's revenue came in at Rs 2,585 crore, higher by 12.2 percent compared to Rs 2,303 crore during the year-ago period.
The company's gross margins for the quarter stood at 62.1 percent, up 122 basis points from the previous year. The margin improvement was driven by stable raw material prices and a favourable product mix.
At about 9:30 am, shares of the company were trading at Rs 6,603, lower by 3.5 percent from the last close on the NSE. Divis Laboratories shares have risen over 20 percent in the last three months.
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