Shares of Sun Pharmaceutical Industries slumped as much as 5 percent on November 4 after a recent ruling by the US District Court of New Jersey granted a preliminary injunction in a patent dispute case against the drugmaker's hair loss drug, Leqselvi.
At 09.53 am, shares of Sun Pharma were trading at Rs 1,799.45 on the NSE
The court ruling, which grants a preliminary injunction to US-based pharma company Incyte over alleged patent infringement by Sun Pharma, blocks the drugmaker from launching Leqselvi, the medication intended for treating severe alopecia areata, until either a favourable court ruling is made or the patent in question expires in December 2026.
Now, while Sun Pharma has announced that it will immediately appeal against the court's decision, the injunction still puts a major roadblock in the launch timeline of the key drug. Following recent developments, analysts at Emkay Institutional Equities now consider a royalty-based settlement between Sun Pharma and Incyte as the most likely outcome, with the probability of such an agreement increasing.
Leqselvi was a hot topic among analysts during Sun Pharma's recently held earnings call since the drug, projected to generate around $200 million in sales over the next three to four years, was seen as a major revenue opportunity for the drugmaker.
The drug's launch pipeline was derailed as it was slapped with a patent dispute just a week after it received approval from the US Food and Drug Administration during the July-September quarter. Initially, as per reports, the company had planned to launch Leqselvi by August.
In the worst-case scenario, an unfavourable judgment would prevent Sun Pharma from launching Leqselvi until the patent expires, delaying its market entry. Royalties associated with Leqselvi would depend on a settlement, which remains uncertain until the court's decision, according to the management.
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“The launch of Leqselvi hinges on a favorable ruling or settlement fee. A costly or prolonged settlement could reduce Leqselvi’s net present value (NPV),” Nuvama Institutional Equities noted in a recent report. Analysts at Emkay also consider an FY26 launch for Leqselvi as their base case.
In a contrast, brokerage firm Nomura has assumed a Leqselvi launch in FY25 and factored in estimated revenues of $10 million, $80 million, and $150 million in FY25, FY26, and FY27, respectively, from the drug. Likewise, the Nomura's projected earnings impact on Sun Pharma from Leqselvi is estimated at 0.4 percent, 3.1 percent, and 5.2 percent for FY25, FY26, and FY27, respectively.
However, Nomura also notes that if the district court's decision is not overturned on appeal and Sun Pharma does not reach a settlement, the launch of Leqselvi could be delayed until December 2026. In the near term, Nomura expects a negative impact on both earnings and investor sentiment for Sun Pharma.
Uncertainty around Leqselvi's launch has weighed on analysts' outlook for Sun Pharma in previous quarters as well, with many revising estimates for the drugmaker to reflect the delayed rollout.
Despite the Leqselvi setback, Sun Pharma reported robust earnings for the July-September quarter. Its net profit grew 28 percent year-on-year to Rs 3,040 crore, beating analyst expectations. A Moneycontrol poll of 10 brokerages had estimated net profit at Rs 2,911 crore, attributing the solid performance to strong seasonality and growth in the specialty segment.
The company’s consolidated revenue from operations rose 9 percent year-on-year to Rs 13,291 crore, driven by double-digit growth across key markets, particularly in the US, and nearly matched the poll estimate of Rs 13,299 crore.
Also Read | Sun Pharma’s hair loss drug Leqselvi's launch remains in limbo
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