Dr Reddy's to launch generic Valcyte in US; shares soar 4.4%

US Food and Drug Administration has granted final approval to the company to make cheaper copies of Roche Holding AG's antiviral Valcyte

Drugmaker Dr Reddy's Laboratories has got approval from the US health regulator FDA for a generic version of anti-viral drug Valcyte, estimated to have a market size of $500-million, and would soon launch its product there.

This assumes significance as the FDA (Food and Drug Administration) has cancelled a tentative approval given to another Indian company, Ranbaxy, for generic version of the same drug on quality issues pertaining to its facilities.

Riding on the announcement, shares of Dr Reddy's gained 4.42% to end at Rs 3,397.1 apiece on the BSE.

Valcyte (Valacyclovir Hydrochloride) is prescribed to patients with acquired immunodeficiency syndrome (AIDS) for the treatment of cytomegalovirus (CMV) retinitis (When CMV virus infects the eyes, it is called CMV retinitis).

The US Food and Drug Administration (FDA) has granted final approval to Dr Reddy's to make cheaper copies of Roche Holding AG's antiviral Valcyte.

When contacted, a spokesperson for Dr Reddy's told PTI that the product would be launched shortly in the US, but declined to give any specific timeline.

According to analysts, the drug is estimated to have a market size of $500 million (Rs 3,000 crore) and the new product has potential to add nearly Rs 200 crore to the topline of Hyderabad-based drug maker.

The cancellation of tentative approval given earlier to Ranbaxy also led to Ranbaxy losing its 180-day exclusivity for its Abbreviated New Drug Application (ANDA).

The FDA has said that its original decisions granting tentative approvals were 'in error' because of the compliance status of the facilities referenced in the ANDAs at the time the tentative approvals were granted.

As a consequence, in FDA's view, Ranbaxy has forfeited its eligibility for 180-day exclusivity for its ANDA for valganciclovir Hydrochloride tablets USP, 450 mg, Ranbaxy said yesterday.

Analysts expect that the grant of final approval to Dr Reddy's would fetch the company $30-40 million in sales.

"Valcyte is a $500 million sale in US and hence can add at least $30-40 mn to the sales of the company. We maintain our buy on the stock with a price target of Rs 3,723," Angel Broking, VP Research - Pharma, Sarabjit Kour Nangra said.