Hold Lupin; target of Rs 760: Prabhudas Lilladher
Prabhudas Lilladher recommended hold rating on Lupin with a target price of Rs 760 in its research report dated December 19, 2019.
December 20, 2019 / 11:31 AM IST
Prabhudas Lilladher's research report on Lupin
Although Lupin management has guided to achieve sales of USD100-150mn (Rx) in US$600m Bacterial Vaginosis (BV) market in the US (3% CAGR), we expect Solosec to reach peak sales of only US$50-60m (US$3-5mn/quarter currently) and achieve break-even in FY22E. We believe competition from metronidazole due to a) proven track record b) lower price and c) better efficiency (58-100% cure rate) will limit the shift towards Solosec. We expect Metronidazole will continue to be the market leader in Rx, and the preferred choice of medical practitioners even though Solosec has benefits of single-dose treatment. Currently, Solosec is the major revenue contributor to the branded business, and LPC is highly focused to make Solosec a successful brand in women's healthcare.
We believe lower than expected ramp-up of Solosec and four plants under OAI status will continue pose strong valuation overhang. Maintain 'Hold' with TP Rs760.
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