Moneycontrol Bureau
Opportunity on contraceptive drug Nuvaring, which will be USD 80-90 million drug in FY19, can play out sooner for Dr Reddy's Laboratories (DRL), says Credit Suisse that has maintained underperform rating on the stock with a target price of Rs 2,750.
Nuvaring is the largest of the eight products that Dr Reddy's has bought from Teva in June 2016. DRL acquired a portfolio of eight abbreviated new drug applications (ANDAs) in the US for USD 350 million as part of the divestment process in Teva's acquisition of Allergan's generic business.
"Teva filed ANDA on Nuvaring in July 2015 and therefore assuming 2.5 years timeline for FDA approval, Nuvaring could be an opportunity for DRL in Q4FY18 and therefore the market could open up a quarter earlier than patent expiry," the brokerage house says, adding Nuvaring has one drug delivery patent expiring on April 8, 2018.
Actavis and Teva have pending ANDAs on Nuvaring.
"Actavis was the first to file on Nuvaring ANDA but did not get tentative approval within 30 months. Therefore it is not certain whether Actavis retains 180 days exclusivity. Merck is likely to appeal the District court decision which may take another 6-9 months and if Actavis gets exclusivity then DRL has the way clear to launch in 2HFY18," Credit Suisse says.Merck lost the district court case on August 26, 2016 on grounds of "obviousness".
The April-June quarter for Dr Reddy's was a very weak quarter. Therefore with the next two quarter results, the market will gain more confidence about the range of FY18 earnings per share, feels the brokerage house.
According to its research note, upside to numbers could come from the anti-nausea injection Aloxi 505(b)(2) opportunity if DRL were to win the case. Credit Suisse expects case decision in end September 2016 or October 2016.DRL received approval from the US health regulator for Aloxi in March 2016.
Meanwhile, Dr Reddy's has launched Nitroglycerin sublingual tablets in the US market. The drug that is used to prevent chest pain caused by coronary artery disease had US sales of USD 108 million till March 2016.
At 13:06 hours IST, the scrip of Dr Reddy's Laboratories was quoting at Rs 3,044.10, up Rs 4.15, or 0.14 percent on the BSE.Posted by Sunil Shankar Matkar
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