Opioid treatment drug ban buzz drags Dr Reddy's 6% in a firm market

The stock dipped 6% to Rs 2,536 on the BSE in intra-day trade on back of heavy volumes.

Dr Reddy’s Laboratories has dipped 6% to Rs 2,536 on the BSE in intra-day trade on back of heavy volumes on reports that the US appeals court rejected the drug firm’s request that would have allowed the company to sell a generic version of Indivior Plc’s Suboxone Film - a drug used for opioid addiction treatment - in the American market immediately.

The sales ban will remain in force to give Indivior time to challenge a November, 20 appeals court decision it lost. Indivior, according to reports, has until December, 20 to file a petition for rehearing in the case, and no extensions will be granted, the Bloomberg report suggested. CLICK HERE TO READ FULL REPORT.

Dr Reddy’s Laboratories on November 20 said that the US Court of Appeals has lifted the preliminary injunction (PI) that had blocked the company’s from selling generic version of Suboxone (buprenorphine and naloxone), used to counter opioid addiction and aid in pain management. The company was expected to launch the product soon “at risk”, given ongoing patent litigation.

Since November 20, Dr Reddy’s had outperformed the market and surged 11%, as compared to 1% decline in the S&P BSE Sensex till Tuesday. The stock touched a 52-week high of Rs 2,745 on December 3, 2018 on the BSE in intra-day trade.

“We believe this favorable PI ruling enhances the probability of a positive outcome on the litigation front. If Dr Reddy’s wins the patent (305) litigation, it will be entitled compensation in terms of loss in profit due to blocked sales during the injunction period. The company had received approval for gSuboxone on 15 June 2018, indicating compensation for loss of around 4-5 months of sales. However, if Dr Reddy’s loses the lawsuit, it may be liable to pay damages,” the brokerage firm had said in November 20 event update. The brokerage firm have a target price of Rs 2,501 on the stock.

At 01:02 pm; Dr Reddy’s was trading 5.6% lower at Rs 2,557 on the BSE, as compared to 0.95% rise in the S&P BSE Sensex. The trading volumes on the counter jumped three-fold with a combined 2.35 million equity shares changed hands on the BSE and NSE so far.