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UBS Investment Research
Dr. Reddy's Labs
Allegra D-24 PI lifted: time to perk up
„ District court lifts preliminary injunction on Dr Reddy’s launch
On Jan 28th , Sanofi and AMRI have filed a stipulation regarding the generic tablet
of Allegra D-24 that based on Markman ruling passed by the district court on Jan
14th’ 2011, AMRI and its exclusive licensee Sanofi cannot prove infringement of
Allegra-D 24 patent ‘906 by Dr. Reddy’s generic version. As a result, the district
court has lifted the preliminary injunction on Dr. Reddy’s launch of Allegra D-24.
„ Allegra D-24 could hold more upside
Dr Reddy’s is the only current Para IV filer for Allegra D-24 which has a mkt. size
of ~US$200mn. We assume only 40% mkt share for Dr Reddy’s in Allegra D-24
mkt. leaving room for potential authorized generic and OTC switch. Sanofi on Jan
25 announced FDA approval to shift Allegra family to the OTC market. We expect
Dr Reddy’s to also launch the product in the OTC mkt with a couple of qtrs lag.
This however will be an upside to our estimates. Allegra (incl. D-24) contributes
Rs 6.2/Rs 5.3 or 6.6%/5.1% of our FY12/FY13 EPS estimates respectively.
„ FY12 outlook remains strong, remain 9% ahead of consensus
We believe the recent stock price correction is an attractive buying opportunity as
we believe earnings outlook for the co. remains strong with potential launch of
Fondaparinux and Zyprexa exclusivity in FY12 and Geodon exclusivity in FY13.
We remain 9%/8% ahead of consensus for FY 12E/13E earnings respectively.
„ Valuation: Maintain Buy, PT Rs 2,000
We derive our PT from a DCF-based methodology and explicitly forecast long
term valuation drivers using UBS’s VCAM tool. We assume a WACC of 11%.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Dr. Reddy's Labs
Allegra D-24 PI lifted: time to perk up
„ District court lifts preliminary injunction on Dr Reddy’s launch
On Jan 28th , Sanofi and AMRI have filed a stipulation regarding the generic tablet
of Allegra D-24 that based on Markman ruling passed by the district court on Jan
14th’ 2011, AMRI and its exclusive licensee Sanofi cannot prove infringement of
Allegra-D 24 patent ‘906 by Dr. Reddy’s generic version. As a result, the district
court has lifted the preliminary injunction on Dr. Reddy’s launch of Allegra D-24.
„ Allegra D-24 could hold more upside
Dr Reddy’s is the only current Para IV filer for Allegra D-24 which has a mkt. size
of ~US$200mn. We assume only 40% mkt share for Dr Reddy’s in Allegra D-24
mkt. leaving room for potential authorized generic and OTC switch. Sanofi on Jan
25 announced FDA approval to shift Allegra family to the OTC market. We expect
Dr Reddy’s to also launch the product in the OTC mkt with a couple of qtrs lag.
This however will be an upside to our estimates. Allegra (incl. D-24) contributes
Rs 6.2/Rs 5.3 or 6.6%/5.1% of our FY12/FY13 EPS estimates respectively.
„ FY12 outlook remains strong, remain 9% ahead of consensus
We believe the recent stock price correction is an attractive buying opportunity as
we believe earnings outlook for the co. remains strong with potential launch of
Fondaparinux and Zyprexa exclusivity in FY12 and Geodon exclusivity in FY13.
We remain 9%/8% ahead of consensus for FY 12E/13E earnings respectively.
„ Valuation: Maintain Buy, PT Rs 2,000
We derive our PT from a DCF-based methodology and explicitly forecast long
term valuation drivers using UBS’s VCAM tool. We assume a WACC of 11%.
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