Dr Reddy's reclaims spot as India's 2nd most valuable pharma company

At 02:17 pm, Dr Reddy's Labs market cap stood at Rs 90,348 crore while that of Divi's Laboratories stood at Rs 89,119 crore, BSE data show

Dr Reddy's Laboratories reclaimed the tag of being the second most valuable listed pharmaceutical company after its share price surged 14 per cent on Friday, surpassing drugmaker Divi's Laboratories.

At 02:17 pm, Dr Reddy's Labs market cap stood at Rs 90,348 crore, while that of Divi's Laboratories was Rs 89,119 crore, BSE data shows. Both these stocks hit their respective highs on Friday. Sun Pharma is the most valued listed company of India with market cap of Rs 1.26 trillion.

Dr Reddy's Labs rallied 14 per cent to hit an intra-day high of Rs 5,497 after the company entered into a settlement agreement with Celgene Corp. With a favorable ruling in the appeals court, the odds of launching gVascepa also rise considerably.

"gRevlimid is a large product with around US$7.5 billion sales annually. Assuming a launch from Jan'23 onward with a three-player market initially and full competition after FY26, our analysis yields an NPV of Rs 333 per share. Given uncertainty around the litigation, the Street did not ascribe any value to the gRevlimid opportunity, which will start being factored in now," analyst at Emkay Global Financial Services said. However, the stock was trading above the brokerage firm target price of Rs 5,325 per share.

Meanwhile, Motilal Oswal Financial Services says that as per the settlement terms, Dr Reddy's would be allowed to sell volume-limited quantities of g-Revlimid in the US starting sometime in FY23. "However, as a part of the agreement, Innovator Celgene has agreed to provide licenses to patents required to manufacture g-Revlimid to Dr Reddy's from no earlier than 31st Jan'26, at which time Dr Reddy's would be allowed to sell unlimited quantities of g-Revlimid in the US," it said in a company update. It has 'neutral' rating on the stock.

In the past four trading days, the stock has zoomed 26 per cent after the company and Russia's sovereign wealth fund, Russian Direct Investment Fund (RDIF), agreed to cooperate on clinical trials and distribution of Sputnik V, the latter's Covid-19 vaccine candidate, in India.

The Sputnik V vaccine, which is based on well studied human adenoviral vector platform with proven safety, is undergoing clinical trials for the coronavirus pandemic. The agreement between RDIF and Dr Reddy's reflects the growing awareness of countries and organizations to have a diversified anti-Covid vaccine portfolio to protect their populations.