Formulation supply to US markets set to lift Cipla revenues

Mumbai-based drug maker Cipla Ltd may witness a revenue gain in the second half of this financial year as it starts supplying the Dymista formulation to Swedish pharmaceutical company Meda AB for the US market. Cipla has a manufacturing contract with Meda, which has discovered and developed the drug. Meda is planning to launch it in the US in a few months.

The drug, a combination inhaler for the treatment of allergic rhinitis, is targeted at 60 million patients in the US. According to Meda’s 2011 annual report, the US and European Union markets for Dymista are expected to be around $6 billion.

Apart from sales of the formulation, Cipla, under the agreement, is also entitled for an upfront milestone payment of $15 million from Meda, market sources said. In 2009, Cipla had signed a long-term collaboration agreement with Meda to develop and market Dymista for various global markets.

When contacted, Cipla Chief Executive Officer S Radhakrishnan confirmed the company had a manufacturing agreement with Meda, but refused to divulge details of the arrangement and plans for the launch of the drug.

“Cipla is the sole supplier for Dymista in the US and other markets, so, it will definitely have an upside as soon as it starts supply. However, because the drug is new, it may take some time to pick up sales and meaningful upsides may be seen from the next financial year,” the source said.

According to analyst estimates, Cipla is expected to garner revenues of around $100 million from the product in 2013-14. Cipla has also tied up with Meda to market a few other inhaler products in various markets. Shares of Cipla on Monday ended at Rs 351.4 on BSE, up 0.4 per cent from their previous close.

Meda, which received US Food and Drug Administration’s approval for Dymista in May, said the drug would be available in the US market in the second half of 2012. The patents for Dymista in the US are extending through 2023 and 2026. Meda is also awaiting approval for Dymista in EU.

According to a report by Edelweiss Securities, Meda expects Dymista to be a premium priced brand, given its high efficacy and safety profile, with a potential to become a billion-dollar product at the peak level.

“The US, being the largest market, will account for 75 per cent of the world market for Dymista. Incrementally, the launch will be followed up in the European Union and emerging markets,” the report said. Meda had 300 specialised fieldforce to market the product in the US. Additionally, it has hired 200 field representatives in emerging markets for the potential launch.