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Pharmaceuticals
India
Key takeaways from US generics results for our coverage universe. Key takeaways
from 3Q results of US generics are—(1) Watson’s EPS guidance for Lipitor implies
downside risks to our 6-month Lipitor value/share of Rs36.5, we believe Street’s is even
higher, (2) Hospira maintains Taxotere share at 50%, a big positive for Cadila, and
(3) Par concedes market share in Sumatriptan injection to SUN, expects more erosion as
its inventory levels run down. We would be sellers of Ranbaxy amid strength in the
stock in the run-up to Lipitor launch. Our top picks remain SUN and Lupin due to
(1) above-market India growth, and (2) strong and sustainable US product pipeline
Watson’s comments imply downside risks to our Rs36.5/share exclusivity value from Lipitor
We do not share the Street’s optimism of Ranbaxy garnering a high market share in Lipitor during
exclusivity and believe there are downside risks to our 6-month Lipitor value/share of Rs36.5 (we
assume 42% market share, 50% price erosion). We believe Street’s estimates are even higher.
Watson has given EPS guidance of US$0.48 -0.53 in 4Q2011E from Lipitor (which includes 10
weeks’ inventory stocking). According to our analysis, assuming 50% erosion, this is based on
33% market share for Watson (at middle point of guidance) and 40% market share retained by
Pfizer implying Ranbaxy can garner 27% market share at the most (see Exhibit 1). This implies
value of Rs25/share from Lipitor for Ranbaxy during six months. More importantly, the lower share
in exclusivity will lead to lower post-exclusivity sales in CY2012E for Ranbaxy. We assume US$40
mn post-exclusivity sales (15% market share, 90% price erosion), which are likely to witness
downward revision due to lower market share in exclusivity.
According to Watson, Ranbaxy is also facing supply issues with Nexium finished dosage in Europe,
and Watson claims gaining significant market share in UK despite its entry after Ranbaxy on
account of the latter’s supply issues.
Hospira maintains 50% market share in Taxotere at slightly lower pricing—positive for Cadila
Despite entry of SUN in mid-May 2011, Intas in 1QFY12 and Sandoz in 2QFY12, Hospira maintains
close to 50% market share in Taxotere, ahead of its guidance of 35% upon launch, although
pricing is down to around 50-55% of branded price from 45% levels upon launch. This, we
believe, could provide an upside to our Hospira JV sales for Cadila in 2QFY12E, which is a highmargin
revenue stream for Cadila. We assume 18% qoq decline in Hospira JV sales to Rs600 mn in
2QFY12E.
Par concedes market share in Sumatriptan to SUN, expects further erosion as inventory runs down
Sun was the third player to enter Sumatriptan auto injector in end-June 2011 and Par admits it has
lost some market share to SUN. Par expects further erosion in its market share going forward as its
inventory levels run down.
Optimer sales of Difficid are US$11 mn, insignificant to make an impact at Biocon’s level
Optimer reported sales of US$10.6 mn between July 19 and September 30 from Difficid which
included some amount of pipeline filling as sales from wholesalers to hospitals; retail was US$7
mn. These numbers imply API sales of Difficid from Biocon were insignificant in 2QFY12. We
believe the upside from API sales of fidaxomicin will emerge for Biocon starting FY2013E.
In Europe, Optimer has received positive opinion from the Committee for Medicinal Products for
Human, which is the advisory committee to EMA, and the final decision of approval is expected
over the next few months. Biocon is the exclusive API supplier for three years.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Pharmaceuticals
India
Key takeaways from US generics results for our coverage universe. Key takeaways
from 3Q results of US generics are—(1) Watson’s EPS guidance for Lipitor implies
downside risks to our 6-month Lipitor value/share of Rs36.5, we believe Street’s is even
higher, (2) Hospira maintains Taxotere share at 50%, a big positive for Cadila, and
(3) Par concedes market share in Sumatriptan injection to SUN, expects more erosion as
its inventory levels run down. We would be sellers of Ranbaxy amid strength in the
stock in the run-up to Lipitor launch. Our top picks remain SUN and Lupin due to
(1) above-market India growth, and (2) strong and sustainable US product pipeline
Watson’s comments imply downside risks to our Rs36.5/share exclusivity value from Lipitor
We do not share the Street’s optimism of Ranbaxy garnering a high market share in Lipitor during
exclusivity and believe there are downside risks to our 6-month Lipitor value/share of Rs36.5 (we
assume 42% market share, 50% price erosion). We believe Street’s estimates are even higher.
Watson has given EPS guidance of US$0.48 -0.53 in 4Q2011E from Lipitor (which includes 10
weeks’ inventory stocking). According to our analysis, assuming 50% erosion, this is based on
33% market share for Watson (at middle point of guidance) and 40% market share retained by
Pfizer implying Ranbaxy can garner 27% market share at the most (see Exhibit 1). This implies
value of Rs25/share from Lipitor for Ranbaxy during six months. More importantly, the lower share
in exclusivity will lead to lower post-exclusivity sales in CY2012E for Ranbaxy. We assume US$40
mn post-exclusivity sales (15% market share, 90% price erosion), which are likely to witness
downward revision due to lower market share in exclusivity.
According to Watson, Ranbaxy is also facing supply issues with Nexium finished dosage in Europe,
and Watson claims gaining significant market share in UK despite its entry after Ranbaxy on
account of the latter’s supply issues.
Hospira maintains 50% market share in Taxotere at slightly lower pricing—positive for Cadila
Despite entry of SUN in mid-May 2011, Intas in 1QFY12 and Sandoz in 2QFY12, Hospira maintains
close to 50% market share in Taxotere, ahead of its guidance of 35% upon launch, although
pricing is down to around 50-55% of branded price from 45% levels upon launch. This, we
believe, could provide an upside to our Hospira JV sales for Cadila in 2QFY12E, which is a highmargin
revenue stream for Cadila. We assume 18% qoq decline in Hospira JV sales to Rs600 mn in
2QFY12E.
Par concedes market share in Sumatriptan to SUN, expects further erosion as inventory runs down
Sun was the third player to enter Sumatriptan auto injector in end-June 2011 and Par admits it has
lost some market share to SUN. Par expects further erosion in its market share going forward as its
inventory levels run down.
Optimer sales of Difficid are US$11 mn, insignificant to make an impact at Biocon’s level
Optimer reported sales of US$10.6 mn between July 19 and September 30 from Difficid which
included some amount of pipeline filling as sales from wholesalers to hospitals; retail was US$7
mn. These numbers imply API sales of Difficid from Biocon were insignificant in 2QFY12. We
believe the upside from API sales of fidaxomicin will emerge for Biocon starting FY2013E.
In Europe, Optimer has received positive opinion from the Committee for Medicinal Products for
Human, which is the advisory committee to EMA, and the final decision of approval is expected
over the next few months. Biocon is the exclusive API supplier for three years.
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