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Research
Ranbaxy Laboratories - Limited upside from Lipitor; prefer Sun Pharma - Sharekhan
Posted On : 2011-12-02 10:12:30( TIMEZONE : IST )
Expect $450mn revenue from Lipitor for Ranbaxy: Ranbaxy Laboratories (Ranbaxy) has finally got the approval for Lipitor, which is Pfizer's top selling product having sales in the US of $7.9 billion (12 months to September 2011). Ranbaxy would be able to launch this product from New Jersey based Ohm Laboratories' plants. The active pharmaceutical ingredient (API) for this product would be supplied from Indian plants. Ranbaxy is expected to hold an approximately 30% market share in the US. Post exclusivity the market share is expected to decline sharply due to the entry of other players like Teva, Mylan, Dr Reddy's Laboratories etc. We expect a 10% market share and 90% price erosion post exclusivity for Ranbaxy.
USFDA approval of Mohali (India) plants: In a separate development, Ranbaxy has received approvals from the United States Food and Drug Administration (USFDA) for its Mohali based plants, which is expected to help the company ramp up product filings in the US. We expect the Mohali plants to recoup the flow of revenue from the US (although re-filing would be required for most of the products filed earlier from banned plants). Currently Ranbaxy supplies to the US market from Its US based plants. During the 9 months of CY2011, the company has generated a revenue of $334 million in the US.
Limited upside from Lipitor: For Ranbaxy, we see three major factors which will erode a material portion of upside from Lipitor - (1) profit sharing with Teva (2) settlement costs which might have been paid by Ranbaxy to the USFDA and (3) manufacturing from USA based site, where cost of production is generally higher when compared with the Indian site. All this will lead to only a nominal upside from Lipitor exclusivity.
Triggers other than Lipitor: Apart from Lipitor, Ranbaxy has settlements on Provigil (expected to be launched in Q2CY2012) and Actos (expected to be launch in Q3CY2012). We expect Rs750 crore of revenue potential from these products in CY2012. Besides, supplies from the Mohali plants, a pick up in revenue from the domestic market on a better contribution from the newly added field force and strong performance in emerging markets would be the key factors for growth.
