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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28032012.pdf
Deep dive into inhalers opportunity. We view the inhalers opportunity for generic
companies such as Cipla with cautious optimism. We believe the Street is ignoring certain
facts which make this a tough market to enter, although it remains a lucrative market yet
to be genericized. The following reasons make us cautious—(1) patent protection on the
device runs longer than the product patent, (2) will remain physician-oriented markets
necessitating strong marketing partnerships which Cipla lacks, (3) stringent regulatory
environment would imply country-wise approvals rather than a pan-European approval,
and (4) generic Advair, largest inhaler worldwide, genericized in EU, but with limited
success so far. Move to REDUCE (was SELL); TP Rs315 (was Rs320), 18X FY2013E EPS.
What is the fascination with generic Seretide/Advair—most preferred combination inhaler in world
Combination ICS/LABA (see definition inside) is the largest market accounting for 35% of the
respiratory market and is the typical treatment option for asthma/COPD. Seretide is the most
preferred combination inhaler in the world with sales of a whopping US$8.2 bn (2011) versus
US$2.7 bn (2010) for Symbicort.
Generic competitive landscape—Teva, Sandoz, Mylan, Cipla are front-runners
Both Teva and Sandoz, the top-2 generic companies in the world, have publicly acknowledged
that generic entry into combination inhalers has been tougher than they anticipated. Sandoz has
withdrawn its EU application twice while Teva aims to submit its application for a branded product
in EU in 2012E. According to GSK filings, four companies (as mentioned above) have successfully
overturned combination patents for Seretide in a total of four countries of EU. Among them,
Cipla’s partner Neolab has successfully challenged the patent only in Germany till date. So far
there has been only one launch of generic Advair in Greece by Elpen, a small company
which has got approvals across seven other countries. There has been no application yet for a
pan-European approval for Seretide, as per GSK filings. In July 2011, GSK settled all pending
litigation with Sandoz and as per the agreement, GSK will not pursue legal action to block launch
of generic Seretide by Sandoz in any EU country.
Cipla—combination inhalers might still be a while away
We remain extremely cautious on the Street’s euphoria over Cipla’s entry into generic Advair in EU
in late 2012-13E. See our reasons inside.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://www.kotaksecurities.com/pdf/indiadaily/indiadaily28032012.pdf
Deep dive into inhalers opportunity. We view the inhalers opportunity for generic
companies such as Cipla with cautious optimism. We believe the Street is ignoring certain
facts which make this a tough market to enter, although it remains a lucrative market yet
to be genericized. The following reasons make us cautious—(1) patent protection on the
device runs longer than the product patent, (2) will remain physician-oriented markets
necessitating strong marketing partnerships which Cipla lacks, (3) stringent regulatory
environment would imply country-wise approvals rather than a pan-European approval,
and (4) generic Advair, largest inhaler worldwide, genericized in EU, but with limited
success so far. Move to REDUCE (was SELL); TP Rs315 (was Rs320), 18X FY2013E EPS.
What is the fascination with generic Seretide/Advair—most preferred combination inhaler in world
Combination ICS/LABA (see definition inside) is the largest market accounting for 35% of the
respiratory market and is the typical treatment option for asthma/COPD. Seretide is the most
preferred combination inhaler in the world with sales of a whopping US$8.2 bn (2011) versus
US$2.7 bn (2010) for Symbicort.
Generic competitive landscape—Teva, Sandoz, Mylan, Cipla are front-runners
Both Teva and Sandoz, the top-2 generic companies in the world, have publicly acknowledged
that generic entry into combination inhalers has been tougher than they anticipated. Sandoz has
withdrawn its EU application twice while Teva aims to submit its application for a branded product
in EU in 2012E. According to GSK filings, four companies (as mentioned above) have successfully
overturned combination patents for Seretide in a total of four countries of EU. Among them,
Cipla’s partner Neolab has successfully challenged the patent only in Germany till date. So far
there has been only one launch of generic Advair in Greece by Elpen, a small company
which has got approvals across seven other countries. There has been no application yet for a
pan-European approval for Seretide, as per GSK filings. In July 2011, GSK settled all pending
litigation with Sandoz and as per the agreement, GSK will not pursue legal action to block launch
of generic Seretide by Sandoz in any EU country.
Cipla—combination inhalers might still be a while away
We remain extremely cautious on the Street’s euphoria over Cipla’s entry into generic Advair in EU
in late 2012-13E. See our reasons inside.
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