Cadila Healthcare surpasses Lupin to become 2nd most valuable pharma firm

Cadila Healthcare with m-cap of Rs 54,719 cr, stood ahead of Lupin, which have m-cap of Rs 52,217 cr

Cadila Healthcare on Wednesday edged past Lupin to become the second most valuable pharmaceutical company by market capitalisation. 

What has helped Cadila are its improving US growth prospects and key drug and plant approvals by the FDA. Brokerages have upgraded their earnings estimates for the company. 

The trigger for the Cadila stock’s nearly 10 per cent jump was approval for the generic version of Lialda, a drug used for treating ulcerative colitis with sales of $1.14 billion. Cadila has a first-to-file status and could get a six month window to market the drug before competitors enter the market. 

Another trigger is the expectation that the company’s Moraiya plant will receive clearance by the FDA. One of the most significant filings from the Moraiya plant was Lialda and after its approval analysts believe other approvals could come through.

 

Analysts at Edelweiss Securities have raised Cadila’s earnings estimates and upgraded the stock’s target price to Rs 600. Rivals like Lupin are facing competition in the US market, which will keep growth muted. Product approvals for Lupin are expected to materialise only by the end of 2017-18 or early 2018-19. 

Cadila had been trading at a discount to its peers and could see its valuation catching up. The revised earnings estimates could further drive up the stock. 

The positive news flow for Cadila started some time ago when inspections by the FDA of the Moraiya plant went through without a hitch. The plant has been under the scanner for a while. This was affecting new product approvals for launches in the US. 

Cadila received its first FDA approval from the Moraiya plant on Friday for an anti-bacterial injectables drug. On Tuesday, the company received a FDA report marking the end of inspections of its Baddi facility. Cadila has a large number of drugs in the US pending approval. It has 115 ANDA approvals among 300 ANDAs filed so far. These include 60 approvals from the Moraiya facility. After the go-ahead for the Moraiya facility, Cadila is expected  to launch over 25 drugs in 2017-18.