Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ranbaxy Laboratories (RBXY)
Pharmaceuticals
A step forward. Ranbaxy’s signing of a consent decree with the US FDA offers a clear
path to resolution of outstanding issues but timelines remain unclear. While Ranbaxy
maintains its level of preparedness is high, we believe this can only be validated once
the decree is made public, which will provide timelines/terms of resolution. We await
incremental information on whether the decree provides for (1) blanket approval, lifting
the ban on either or both of its facilities or (2) product-wise approval, implying longer
timelines for normalization of the US business. In case of the former, we would be
buyers of the stock at these levels. Meanwhile the penalty will wipe out Ranbaxy’s
existing cash, and profits made from Lipitor. Maintain REDUCE; TP revised upwards to
Rs450 (from Rs420), reflecting a weaker Rupee.
Ranbaxy signs consent decree with US FDA for Dewas, Paonta facilities
Ranbaxy has signed a consent decree, involving both its troubled facilities, Dewas and Paonta, with
the US FDA. Ranbaxy confirmed the AIP imposed on Paonta (which is up against issues of a far
more serious nature than Dewas’) has not been lifted with the signing of this consent decree but
once Ranbaxy satisfies the conditions under the decree the AIP will be lifted.
Although a step forward, resolution of problems could still be some time away
The signing of the consent decree provides a clear path to resolution of outstanding problems, but
how long this will take remains unclear. This is because we do not know whether the decree
implies blanket approval, lifting the ban on either Dewas or Paonta, or both, once Ranbaxy
complies with conditions under the decree (Ranbaxy believes its level of preparedness is high). We
would be buyers of the stock at these levels if this turns out to be true. Alternatively the decree
could imply product-wise approval, which would mean a lengthy path towards normalization of
the US business. According to Ranbaxy, details will be available once the consent decree document
is made public after US courts clear it. We believe Ranbaxy’s case is not comparable to Caraco’s as
the latter signed the decree two months after the issue arose, whereas in Ranbaxy’s case, three
years have elapsed between the emergence of issues and the signing of the consent decree and
Ranbaxy has already invested time and money on being inspection-ready.
Mohali SEZ gets approval, Nexium supplies to the US started in November
Ranbaxy confirmed (1) its Mohali SEZ has received FDA approval and upon receiving ANDA
approvals, commercial supplies to the US should start in 2012, and (2) Nexium finished-dosage
supplies to the US started from November 2011. We factor in the latter in our 2012E basebusiness
EPS.
Penalty to wipe out existing cash, profits from Lipitor during exclusivity
Ranbaxy has provided for US$500 mn by way of penalty. As of September 30, 2011, Ranbaxy had
cash of about US$365 mn and we expect it to generate PAT of about US$180 mn (post payment
to Teva) from Lipitor during exclusivity, based on 30% market share and 40% price erosion
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ranbaxy Laboratories (RBXY)
Pharmaceuticals
A step forward. Ranbaxy’s signing of a consent decree with the US FDA offers a clear
path to resolution of outstanding issues but timelines remain unclear. While Ranbaxy
maintains its level of preparedness is high, we believe this can only be validated once
the decree is made public, which will provide timelines/terms of resolution. We await
incremental information on whether the decree provides for (1) blanket approval, lifting
the ban on either or both of its facilities or (2) product-wise approval, implying longer
timelines for normalization of the US business. In case of the former, we would be
buyers of the stock at these levels. Meanwhile the penalty will wipe out Ranbaxy’s
existing cash, and profits made from Lipitor. Maintain REDUCE; TP revised upwards to
Rs450 (from Rs420), reflecting a weaker Rupee.
Ranbaxy signs consent decree with US FDA for Dewas, Paonta facilities
Ranbaxy has signed a consent decree, involving both its troubled facilities, Dewas and Paonta, with
the US FDA. Ranbaxy confirmed the AIP imposed on Paonta (which is up against issues of a far
more serious nature than Dewas’) has not been lifted with the signing of this consent decree but
once Ranbaxy satisfies the conditions under the decree the AIP will be lifted.
Although a step forward, resolution of problems could still be some time away
The signing of the consent decree provides a clear path to resolution of outstanding problems, but
how long this will take remains unclear. This is because we do not know whether the decree
implies blanket approval, lifting the ban on either Dewas or Paonta, or both, once Ranbaxy
complies with conditions under the decree (Ranbaxy believes its level of preparedness is high). We
would be buyers of the stock at these levels if this turns out to be true. Alternatively the decree
could imply product-wise approval, which would mean a lengthy path towards normalization of
the US business. According to Ranbaxy, details will be available once the consent decree document
is made public after US courts clear it. We believe Ranbaxy’s case is not comparable to Caraco’s as
the latter signed the decree two months after the issue arose, whereas in Ranbaxy’s case, three
years have elapsed between the emergence of issues and the signing of the consent decree and
Ranbaxy has already invested time and money on being inspection-ready.
Mohali SEZ gets approval, Nexium supplies to the US started in November
Ranbaxy confirmed (1) its Mohali SEZ has received FDA approval and upon receiving ANDA
approvals, commercial supplies to the US should start in 2012, and (2) Nexium finished-dosage
supplies to the US started from November 2011. We factor in the latter in our 2012E basebusiness
EPS.
Penalty to wipe out existing cash, profits from Lipitor during exclusivity
Ranbaxy has provided for US$500 mn by way of penalty. As of September 30, 2011, Ranbaxy had
cash of about US$365 mn and we expect it to generate PAT of about US$180 mn (post payment
to Teva) from Lipitor during exclusivity, based on 30% market share and 40% price erosion
No comments:
Post a Comment