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Sun Pharmaceutical
Industries
Taxotere: Court Case Won;
Now Just an Approval Away
Quick Comment: We believe that Sun is now close to
monetizing one of its largest product opportunities in the
US – Taxotere (US$1.2bn brand sales). Importantly, we
expect this to be a low competition market for at least
two to three years. This should drive up near- to
mid-term earnings, way ahead of market expectation.
We reiterate our OW rating on the stock.
What's new: A US District Court judge ruled in favor of
Sun in the Taxotere patent challenge case. Specifically,
the court has applied the Hospira/Apotex ruling on ‘512
and ‘561 patents in Sun’s case to rule them invalid due
to obviousness and unenforceability. The Hospira/
Apotex decision has already been appealed, and the
outcome will now also be applicable to Sun.
What next: We believe that Sun will now use this court
ruling to get FDA to approve its NDA on generic
Taxotere. Unique circumstances of this case (detailed in
Fielding Taxotere Questions, dated October 11, 2010),
could enable Sun to launch its product as early as
November 14, 2010 (when the compound patent
expires); well before expiry of its 30 months’ NDA
suspension period. It appears that the company could
launch earlier than our assumption of April 2011.
Launch is not a given, however, since an Appeals
court decision is pending (12-15 months away) and, if
launched, it will be launch at risk. However, we believe
that there is a good chance that Sun will launch the
product in the near term (subject to FDA approval) in
view of the strength of the District court ruling
(invalidated patents on more than one independent
basis) and the possibility of de-risking by launching after
Hospira and AG. Also, we do not think that the Protonix
launch (where Sun eventually lost) is a good parallel,
since in that case Sun launched after PI motion win
(versus a win on underlying patent challenge for
Taxotere).
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