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Glenmark Pharma
gTarka: not the final verdict yet
Glenmark lost a jury trial in the US courts for gTarka (which it had launched atrisk). We believe that the final verdict of the entire case is expected in a month.
Glenmark continues to believe that it has a strong chance to win. However, an
unfavourable final verdict could be a near-term downside risk by 2-5%.
Glenmark lost jury trial in the US courts for generic (g) Tarka
Glenmark launched gTarka (US annual revenues of US$58m) 'at risk' towards the end of
1QFY11 after a federal court rejected a preliminary injunction by the product's innovator,
Abbott Laboratories (NR).
Final verdict could swing either ways
We believe company has lost one of the cases for generic Tarka in US for expiration of the
compound patent in a jury trial, the final verdict of which is still due and is expected to be
announced by the judge in a month's time. Along with this, the verdict on double patenting is
also scheduled to be announced by the judge - which we believe would be key.
In our view, Glenmark has generally adopted a judicious approach to monetising its Para IV
opportunity pipeline. Despite pressing ahead with the launch of gTrileptal in 3QFY08, it then
opted for a settlement on gMalerone. Similarly, it entered into an agreement with Par Pharma
to minimise its risk exposure in the event of an unfavourable outcome in the gZetia case.
Also, with losing gTarka in jury trial, we believe Glenmark would stop further supplies.
We have factored gTarka in our core business as it is likely to be an annuity-type opportunity
(subject to final judgement in February) given the absence of competition (as currently there
are no filers). Assuming 30% price erosion and a 50% market share (brand sales were
US$58m), we estimate this product will net annual revenues of US$20m and EPS accretion of
about Rs1.9/sh) which could be at risk from an unfavourable verdict in this trial. Also there
could be damages (>US$15m) as stated in the jury trial verdict.
We maintain Buy rating with TP of Rs 400/ share
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