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Prandin patent case: A positive win
Event: The US Supreme Court ruled in favor of Caraco, US subsidiary of Sun
Pharma, in its patent litigation against Novo Nordisk’s diabetes drug Prandin.
The court concluded that Caraco can seek correction of Novo’s inaccurate
use-codes over the drug; however, the court’s ruling on whether the correction
applies to Caraco’s labeling is still pending.
Background: Prandin is approved by the USFDA for three specific uses, but
Novo’s original patent covered only one usage. Thus, post filing the ANDA for
gPrandin, Caraco also filed a section 8 statement which seeks approval for two
other uses not covered by the patent listed in the Orange Book. Novo then
changed its use-code for the ‘358 patent’, broadening the scope of the usecode
to cover all the three approved uses. Usually, the USFDA approves the
generic drug within the scope of the use-codes and does not determine the
scope of the same. Post favorable ruling, Caraco could get approval for the
two other uses without infringing Novo’s patent.
About Prandin: Prandin (known as Repaglinide is used to cure diabetes) has a
market size of US$230mn in US and its patent is held by Novo Nordisk till
2018. Caraco holds an FTF status on the drug and is still awaiting the final
approval from the USFDA (post the site transfer).
Impact: We believe that Sun Pharma can clock US$30mn in terms of revenues
from the gPrandin supply during exclusivity. While, Novo has filed its appeal
against Caraco in 1QCY2012, the final approval could take some time, leaving
options open for an “at-risk launch” for Sun Pharma.
Outlook and Valuation
We view this ruling as a benchmark for the generic companies where they can
appeal for either invalidity of the patent and/or counterclaim brand’s inaccurate use
codes. This procedure could stall the unnecessary delays caused to stop generic
companies in marketing their drugs.
We believe that the positive ruling could pave way of faster approval for gPrandin.
Along-with strong product pipeline (Uroxatral, Duloxetine, Pregablin, Eszopiclone,
Memantine) spread across FY2013E and FY2014E, such incremental opportunities
would boost the gains of the company. We remain positive on Sun Pharma, given
its steady performance, superior brand franchise in the domestic market, growth
prospects in the US market and the excellent M&A track record.
We factor high tax liability post the budget in our FY2013E numbers and introduce
FY2014E numbers in this note and roll over our target price on new projected EPS.
We recommend Accumulate on the stock with the price target of Rs650. Sun is
currently trading at 25x and 20.4x its FY2013E and FY2014E EPS respectively.
Risks to the view
Delay in product approvals and higher than expected liability on Protonix
litigation
Lower than expected performance from Taro
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Prandin patent case: A positive win
Event: The US Supreme Court ruled in favor of Caraco, US subsidiary of Sun
Pharma, in its patent litigation against Novo Nordisk’s diabetes drug Prandin.
The court concluded that Caraco can seek correction of Novo’s inaccurate
use-codes over the drug; however, the court’s ruling on whether the correction
applies to Caraco’s labeling is still pending.
Background: Prandin is approved by the USFDA for three specific uses, but
Novo’s original patent covered only one usage. Thus, post filing the ANDA for
gPrandin, Caraco also filed a section 8 statement which seeks approval for two
other uses not covered by the patent listed in the Orange Book. Novo then
changed its use-code for the ‘358 patent’, broadening the scope of the usecode
to cover all the three approved uses. Usually, the USFDA approves the
generic drug within the scope of the use-codes and does not determine the
scope of the same. Post favorable ruling, Caraco could get approval for the
two other uses without infringing Novo’s patent.
About Prandin: Prandin (known as Repaglinide is used to cure diabetes) has a
market size of US$230mn in US and its patent is held by Novo Nordisk till
2018. Caraco holds an FTF status on the drug and is still awaiting the final
approval from the USFDA (post the site transfer).
Impact: We believe that Sun Pharma can clock US$30mn in terms of revenues
from the gPrandin supply during exclusivity. While, Novo has filed its appeal
against Caraco in 1QCY2012, the final approval could take some time, leaving
options open for an “at-risk launch” for Sun Pharma.
Outlook and Valuation
We view this ruling as a benchmark for the generic companies where they can
appeal for either invalidity of the patent and/or counterclaim brand’s inaccurate use
codes. This procedure could stall the unnecessary delays caused to stop generic
companies in marketing their drugs.
We believe that the positive ruling could pave way of faster approval for gPrandin.
Along-with strong product pipeline (Uroxatral, Duloxetine, Pregablin, Eszopiclone,
Memantine) spread across FY2013E and FY2014E, such incremental opportunities
would boost the gains of the company. We remain positive on Sun Pharma, given
its steady performance, superior brand franchise in the domestic market, growth
prospects in the US market and the excellent M&A track record.
We factor high tax liability post the budget in our FY2013E numbers and introduce
FY2014E numbers in this note and roll over our target price on new projected EPS.
We recommend Accumulate on the stock with the price target of Rs650. Sun is
currently trading at 25x and 20.4x its FY2013E and FY2014E EPS respectively.
Risks to the view
Delay in product approvals and higher than expected liability on Protonix
litigation
Lower than expected performance from Taro
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