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Ranbaxy (RBXY)
N: Ranbaxy pulls ahead of Watson in generic Lipitor market
Ranbaxy’s total Lipitor prescription share of 32.5% moves
above Watson’s 29.6%; however, Watson share is higher in
new prescriptions
Lipitor share in overall statin market expanded with the launch
of generics; combined Zocor and generic share shrunk
Reiterate Neutral rating and maintain target price of INR454
based on 20x FY13e EPS and INR53 para-IV value
Ranbaxy’s Lipitor and Caduet total prescription shares grow close to one-third.
Recent data show that Ranbaxy’s generic Lipitor market share rose to 32.5% of total
prescriptions in the week ending 23 December 2011 – the third week since the launch of
Lipitor generics. Ranbaxy gained share from Watson, which is now in third place with a
29.6% share. Pfizer’s Lipitor maintains a 40% share. Watson still leads in new
prescriptions, with a 35.6% share versus 25.5% for Ranbaxy. Ranbaxy’s market share in
Caduet has increased to 31% versus 33.6% for Mylan and 35.4% for Pfizer.
Generic market share likely to settle at 62%. The combined market share for generics
(Ranbaxy and Watson) for the week ending 23 December 2011 is at 62.1% versus 62.2%
for the week after and 59.2% for the week before. Pfizer has been able to protect the market
share of its branded Lipitor through strategic tie-ups and by offering higher rebates.
Generic Lipitor likely to take market share from Simvastatin. Observing trends in the
entire statin market over the past year, we note that the recent entry of generic atorvastatin
has taken share from Simvastatin (i.e., the generic version of Zocor). The combined Zocor
and Simvastatin share has fallen from a peak of 49.6% in May 2011 to 43.9% in
December 2011. Lipitor + atorvastatin market share stands at 23.4%, slightly off the peak
of c24% in the full immediate week after the launch of generic variants. Crestor has been
stable with a 12.7% share of total prescriptions for most parts of the year.
Dr Reddy’s plans generic Lipitor launch. As per its settlement with Pfizer, Dr Reddy’s
Labs (OW, TP INR1,950) is slated to enter the market in June 2012, along with Teva and
Mylan. We expect over 90% price erosion with the entry of three more players. We expect
the product to generate cUSD50m sales for Dr Reddy’s. Teva has tentative approval.
Maintain Neutral. We value Ranbaxy at 20x FY13 EPS of INR20 (a 10% premium to
the five-year sector average), adding INR53 for para-IV opportunities. We maintain our
Neutral rating, given the lack of a clear path to recover the base business after the consent
decree. Upside risk includes earlier-than-expected base business recovery and better-thanexpected
margins. Higher price erosion in generic Lipitor and a slower domestic recovery
are downside risks.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ranbaxy (RBXY)
N: Ranbaxy pulls ahead of Watson in generic Lipitor market
Ranbaxy’s total Lipitor prescription share of 32.5% moves
above Watson’s 29.6%; however, Watson share is higher in
new prescriptions
Lipitor share in overall statin market expanded with the launch
of generics; combined Zocor and generic share shrunk
Reiterate Neutral rating and maintain target price of INR454
based on 20x FY13e EPS and INR53 para-IV value
Ranbaxy’s Lipitor and Caduet total prescription shares grow close to one-third.
Recent data show that Ranbaxy’s generic Lipitor market share rose to 32.5% of total
prescriptions in the week ending 23 December 2011 – the third week since the launch of
Lipitor generics. Ranbaxy gained share from Watson, which is now in third place with a
29.6% share. Pfizer’s Lipitor maintains a 40% share. Watson still leads in new
prescriptions, with a 35.6% share versus 25.5% for Ranbaxy. Ranbaxy’s market share in
Caduet has increased to 31% versus 33.6% for Mylan and 35.4% for Pfizer.
Generic market share likely to settle at 62%. The combined market share for generics
(Ranbaxy and Watson) for the week ending 23 December 2011 is at 62.1% versus 62.2%
for the week after and 59.2% for the week before. Pfizer has been able to protect the market
share of its branded Lipitor through strategic tie-ups and by offering higher rebates.
Generic Lipitor likely to take market share from Simvastatin. Observing trends in the
entire statin market over the past year, we note that the recent entry of generic atorvastatin
has taken share from Simvastatin (i.e., the generic version of Zocor). The combined Zocor
and Simvastatin share has fallen from a peak of 49.6% in May 2011 to 43.9% in
December 2011. Lipitor + atorvastatin market share stands at 23.4%, slightly off the peak
of c24% in the full immediate week after the launch of generic variants. Crestor has been
stable with a 12.7% share of total prescriptions for most parts of the year.
Dr Reddy’s plans generic Lipitor launch. As per its settlement with Pfizer, Dr Reddy’s
Labs (OW, TP INR1,950) is slated to enter the market in June 2012, along with Teva and
Mylan. We expect over 90% price erosion with the entry of three more players. We expect
the product to generate cUSD50m sales for Dr Reddy’s. Teva has tentative approval.
Maintain Neutral. We value Ranbaxy at 20x FY13 EPS of INR20 (a 10% premium to
the five-year sector average), adding INR53 for para-IV opportunities. We maintain our
Neutral rating, given the lack of a clear path to recover the base business after the consent
decree. Upside risk includes earlier-than-expected base business recovery and better-thanexpected
margins. Higher price erosion in generic Lipitor and a slower domestic recovery
are downside risks.
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