Should you buy, sell or hold Dr Reddy’s after its legal victory today?

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26 Aug, 2025 12:21

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Brokerage houses are upbeat on future prospects of Dr Reddy’s after the company won a major legal battle against Indivior in the US. The company's shares rose over 8 percent in the morning trade on Wednesday.

An Appeals Court vacated the preliminary injunction order of a federal court, which blocked Dr Reddy’s from selling generic version of opioid treatment drug, Suboxone.

Analysts expect Dr Reddy's to make around $50-75 million in the rest of FY19. Dr Reddy's had booked sales of around $10-15 million in a matter of a few days after its launch, before it was stayed by the court.

Suboxone had sales of around $786 billion in the US for the first nine months of 2018. The drug accounts for about 80 percent of Indivior's sales

Dr. Reddy's launched its generic buprenorphine/naloxone sublingual film or Suboxone, which is used in the treatment of opioid dependence, "at-risk" in the US after it got a final approval from the US FDA on June 15.

An "at-risk" launch of a generic drug is when a company launches the drug for sale while the patent litigation is still ongoing.

Here’s a gist of what brokerages are saying about the stock.

Brokerage: Credit Suisse | Rating: Underperform | Target: Rs 2,100

The target price implies potential downside of 14 percent from the last regular trade.

Further, it expects immediate competition from authroised generic and Mylan for Suboxone.

In a steady state, Suboxone should be six generic player market.

Brokerage: Macquarie | Rating: Neutral | Target: Rs 2,500

The global research firm sees a potential upside of 2 percent.

It also expects Suboxone ‘at risk’ re-launch immediately. Probability of favourable verdict in the full trial on the ‘305 patent increases.

Macquarie expects USD 50-60 million sales of Suboxone in the current financial year; $70 million in the next financial year.

Brokerage: Bank of America | Rating: Buy | Target: Rs 2,989

Bank of America sees a potential upside of 22 percent on the stock.

It observed that Suboxone has sprung back to life as Dr Reddy’s wins ruling. Having said that, competition from other firms can catch up and is a risk, it said.

Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 2,729

Morgan Stanley estimates Suboxone sales of USD 50-120 million for the company in its base-case estimate. Further, it believes that the next 12 months will be important for the company’s all 3 complex generics.

At 09:42 hrs Dr Reddy's Laboratories was quoting at Rs 2,614.85, up Rs 164.60, or 6.72 percent, on the BSE.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on Moneycontrol are their own, and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.