Shares of Dr Reddy’s Laboratories slipped 5 per cent to Rs 2,773 on the National Stock Exchange (NSE) on Friday after rival firm Amneal Pharma received Abbreviated New Drug Application (ANDA) approval for generic birth-control product NuvaRing from the US Food and Drug Administration (US FDA). The stock was the biggest loser among the Nifty 50 pack in an otherwise strong market.
Amneal said on Thursday that it has initiated commercialisation activities for EluRyng, which is being manufactured internally. NuvaRing US annual sales for the 12 months ended October 31, 2019 were approximately $976 million, according to IQVIA, a leading healthcare data and analytics provider.
Besides Amneal, Mayne Pharma and Dr.Reddy's Labs had applied for the licence to launch the first generic drug in the US Teva.
Analyst at Antique Stock Broking said, Dr.Reddy's (4QFY21 launch assumed) being one of the 4 filers in gNuvaring is now likely to be 12 months behind Amneal and 8-10 months behind Teva, in our view.
"While the Amneal launch is a negative, we believe the inherent drug device complexity is likely to keep competition to 4-5 players in the next couple of years. As a result, we see NuvaRing market to be in the range of USD 220-280 million in FY22 (assuming 60-70 per cent price erosion) making it an attractive market for late-entrants," the brokerage firm said in event update.
The analysts, however, remain positive on the stock on the back of a fast growing domestic franchise, improving quality of US launches (Vitamin K1, Hemabate, Zenatane, bortezomib), high-quality EM business, strong cost control and a leaner balance sheet. The brokerage firm maintains ‘buy’ rating on the stock with a target price of Rs 3,100 per share.
At 01:15 pm, Dr Reddy’s recovered its partial losses and was trading 3 per cent lower at Rs 2,818 on the NSE. In comparison, the benchmark Nifty50 index was up 0.86 per cent at 12,074 points.