<p>Drug maker Cipla’s gain from its supply of the Lexapro generic to Israel’s Teva is expected to reflect in its April-June earnings. Teva enjoys Lexapro’s marketing exclusivity in the US for 180 days.
Cipla might earn revenue of around $80 million during the six months spanning March to August, according to an industry source. “Lexapro has a market of $2.9 billion annually. With Teva having an FTF (first-to-file) opportunity on this product, Cipla, as a supplier, is bound to witness a bounty during the April-June and July-September quarters. Although a one-off opportunity, Cipla may gain even after the exclusivity period, when the margin might shrink,” the source told Business Standard.
When asked, Cipla’s chief executive officer, S Radhakrishnan, refused to divulge details. On Friday, shares of Cipla ended at Rs 327.95 on the Bombay Stock Exchange, up one per cent from their previous close.
Lexapro, a medicine to treat anxiety and depression, was originally marketed by Forest Laboratories. With the expiry of its patent on the blockbuster drug, Teva launched its generic version in March and is currently enjoying a 180-day exclusivity on sales.
Cipla’s benefit, it is learnt, is linked to an earlier association with another generic firm, Ivax. Cipla had a long-term manufacturing tie-up with Ivax, acquired by Teva in 2006 for $7.9 billion.
Cipla’s core top line during April-June, according to brokerage Motilal Oswal, is expected to grow 12.5 per cent year-on-year to Rs 1,790 crore. Including the one-off contribution from generic Lexapro supplies to Teva, the revenue is seen to grow at 30.9 per cent year on year to Rs 2,080 crore.
Cipla’s quarterly performance has not been encouraging for several quarters. Analysts are concerned, as the company has not been able to ramp up its formulation exports business, despite favourable currency movement. Cipla’s export model has traditionally been based on supplying low-cost generic drugs to foreign partners. However, the formulation exports have been below expectation, with a growth rate of merely seven per cent during financial year 2011-12.
The company was also witnessing a delay in commercialisation of a large manufacturing facility at a special economic zone at Indore, where it invested Rs 900 crore. “We believe it is imperative for Cipla to get regulatory clearances for products from the Indore SEZ to record higher growth in exports,” Motilal Oswal said in a report.
