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Dr. Reddy’s (DRRD) has launched generic Geodon (Ziprasidone) under
shared exclusivity with Lupin and Sandoz. Ziprasidone has a total branded
value of USD864mn and is used for indication of schizophrenia, acute
mania and bipolar disorder. DRRD has launched this generic in multiple
strengths 20 mg, 40 mg, 60 mg and 80 mg.
Impact
We estimate USD32‐35mn sales from the generic over next six months for DRRD and
USD 25‐26mn at PBT level. We have assumed 70% price erosion to innovator value and
25% market share, assuming a four‐player market including an anticipated launch of
authorized generic (AG) by Pfizer. Its NPV value works out to be INR6.3per share.
Outlook and valuations
Ziprasidone launch is accretive by 2‐4% to FY12E and FY13E earnings, respectively, and
has been factored in our estimates. We thus maintain our FY12‐13 EPS estimates of
INR98.1 and INR106 per share, respectively.
We highlight that DRRD has a robust pipeline targeting potential ~USD25bn market
opportunity in CY12, with a couple of undisclosed potentially high value launches not
build in the Street’s and our estimates. These products give significant upside to FY13
earnings estimates. Total NPV value of exclusive opportunities is INR100 per share. We
maintain ‘BUY/SO’ recommendation/ rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dr. Reddy’s (DRRD) has launched generic Geodon (Ziprasidone) under
shared exclusivity with Lupin and Sandoz. Ziprasidone has a total branded
value of USD864mn and is used for indication of schizophrenia, acute
mania and bipolar disorder. DRRD has launched this generic in multiple
strengths 20 mg, 40 mg, 60 mg and 80 mg.
Impact
We estimate USD32‐35mn sales from the generic over next six months for DRRD and
USD 25‐26mn at PBT level. We have assumed 70% price erosion to innovator value and
25% market share, assuming a four‐player market including an anticipated launch of
authorized generic (AG) by Pfizer. Its NPV value works out to be INR6.3per share.
Outlook and valuations
Ziprasidone launch is accretive by 2‐4% to FY12E and FY13E earnings, respectively, and
has been factored in our estimates. We thus maintain our FY12‐13 EPS estimates of
INR98.1 and INR106 per share, respectively.
We highlight that DRRD has a robust pipeline targeting potential ~USD25bn market
opportunity in CY12, with a couple of undisclosed potentially high value launches not
build in the Street’s and our estimates. These products give significant upside to FY13
earnings estimates. Total NPV value of exclusive opportunities is INR100 per share. We
maintain ‘BUY/SO’ recommendation/ rating on the stock.
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