UBS :: Ranbaxy -Mylan sues US FDA on Lipitor

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UBS Investment Research
Ranbaxy
Mylan sues US FDA on Lipitor
􀂄 Mylan sues US FDA on Rbxy’s Lipitor ANDA
Mylan has filed a case against US FDA alleging that: 1) That FDA has not made
public its stand on Rbxy’s Lipitor ANDA and whether it is covered by the AIP at
Paonta, leading to potential delays in launch of generic for Lipitor 2) Rbxy is
ineligible for marketing exclusivity due to unreliable data and info. contained in
the ANDA filing. 3) Thus, Mylan and other generic players launch of generic
Lipitor therefore should not be blocked by Rbxy’s exclusivity.
􀂄 Mylan case seems similar to the Apotex case on Aricept
We see parallels of this case with the Apotex case on Aricept with Eisai where it
made similar allegations regarding Rbxy’s Aricept filing. The court dismissed
Apotex’s request for declaratory judgement as 1) the co. failed to show that Aricept
generic will be indefinitely delayed due to regulatory issues at Rbxy. 2) Since the
180-day exclusivity is intended by law there is no case for allowing ‘prompt
launch’ of other generics, prior to expiration of the 180 day exclusivity.
􀂄 Trading at bear case value; Risk- Reward favourable
Our bear case of Rs 430 per share assumes Rbxy will forgo its exclusivity for
Lipitor, Caduet, and Actos and long term profitability will remain depressed.
(Please refer to Ranbaxy “Compelling risk/reward; close to bear case” dated Mar 7,
2011). We expect timely approval and launch of Lipitor generic for Rbxy.
􀂄 Valuation: Maintain Buy, PT Rs 630
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume an 11% WACC.