PINC Quick Bite – Lupin

Generic Fortamet exclusivity partially lost- no material impact

The District court of Delaware has granted Shionogi Pharma's (Sciele Pharma) motion for preliminary injunction on generic Fortamet thereby prohibiting Lupin from further selling the product in US. We expect this injunction to lead to loss of Lupin's 180-days exclusivity. However, Lupin had partially monetised the opportunity by filling the channels in the two weeks of October 2011 at-risk launch. Further, if Lupin is able to secure favourable judgement in the case then it would receive USD15mn from Shionogi Pharma as part of compensation. As a result, we don't see a material impact of the loss of exclusivity.

VALUATIONS AND RECOMMENDATION

The stock is trading at 21.2x FY12E and 18.8x FY13E earnings. We are positive on the stock given strong growth across regions (US- OC, India increasing presence in the chronic space and Japan- strong traction expected in the generic pharma space) over the next few years. We maintain 'ACCUMULATE' on the stock with a target price of Rs513.

Source : Equity Bulls

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