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Sun Pharmaceuticals (SUNP)
Pharmaceuticals
Multiple triggers present upside to our FY2012E EPS. We believe likely launch of
four key products in FY2012/13E will present an upside to our EPS of Rs19.7. Unlike
street expectations, we reiterate there is no 30-month stay for Taxotere and retain our
assumption of a mid-FY2012E launch. In addition, transaction documents prepared by
William Blair (advisor to Caraco) suggest strong US sales in FY2012E (estimates as per
Caraco management) with (1) FY2012E Caraco sales estimates at US$268 mn, 7%
higher than our estimate, and (2) gradual recovery in sales from Caraco plant with
FY2012E sales at US$37 mn versus US$23 mn in FY2011E despite delay in resumption
of manufacturing. Maintain ADD, PT: Rs480.
Taxotere (US$1.2 bn drug)—limited competition product, launch imminent
Five companies have filed ANDAs till date with Accord filing in early January 2011. We think
Hospira may enjoy some lead post launch in end-March 2011; however, SUN’s approval should
follow shortly after. Unlike street expectations of 30-month stay blocking SUN’s Taxotere till
January 2012E, we reiterate there is no 30-month stay and retain our assumption of a midFY2012E launch. While Hospira’s formulation is a single vial version, in line with branded product
which Sanofi has successfully converted to single vial, we believe with right pricing SUN should
garner meaningful sales in light of no additional competition likely in 2011E. We include US$70
mn sales in FY2012E (25% market share, 45% price erosion) for Taxotere.
Update on 3 other key products, launch date uncertain (hence not included in our FY2012E EPS)
We provide an update on three other products likely to be launched in FY2012/13E (1) Eloxatin:
On February 16, 2011, District Court of New Jersey issued an injunction preventing launch
by SUN till the court resolves all issues pertaining to settlement agreement. We believe launch by
SUNP is not likely until court decision/settlement is concluded, (2) Prandin: Latest Caraco filing
confirms this product site has been transferred from Caraco facility, we believe there is no
30-month stay and SUN may launch at risk. However, we await final approval before including
in our estimates (US$180 mn sales, SUN likely only filer), (3) Strattera: Eli Lilly had appealed the
lower court verdict, subsequently the Appeals court hearing was completed in December
2010. Even though SUN along with other generics have received final approval, the Appeals court
has granted an injunction that prevents the launch of generics until a ruling is rendered. We await
ruling and believe SUN will enjoy shared exclusivity along with 5-7 other companies.
William Blair documents give FY2012E sales estimates for Caraco as US$268 mn,
7% higher than our estimate
In December 2010, Caraco retained William Blair as an independent advisor to consideration
of Sun Pharma proposal to taking Caraco private which has since been concluded. Readthrough from the documents prepared by William Blair which contains sales estimates by
Caraco management and was presented to the Caraco board for consideration of SUN’s
proposal suggests:
(1) FY2011/12E sales estimates for Caraco are US$307 (in line with our estimate) and
US$268 mn, (7% higher than our estimate), possibly reflecting impact of higher
Taxotere sales.
(2) Gradual recovery in sales from Caraco plant with FY2012E sales at US$37 mn
versus US$23 mn in FY2011E, despite delay in resumption of manufacturing at the
plant.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Sun Pharmaceuticals (SUNP)
Pharmaceuticals
Multiple triggers present upside to our FY2012E EPS. We believe likely launch of
four key products in FY2012/13E will present an upside to our EPS of Rs19.7. Unlike
street expectations, we reiterate there is no 30-month stay for Taxotere and retain our
assumption of a mid-FY2012E launch. In addition, transaction documents prepared by
William Blair (advisor to Caraco) suggest strong US sales in FY2012E (estimates as per
Caraco management) with (1) FY2012E Caraco sales estimates at US$268 mn, 7%
higher than our estimate, and (2) gradual recovery in sales from Caraco plant with
FY2012E sales at US$37 mn versus US$23 mn in FY2011E despite delay in resumption
of manufacturing. Maintain ADD, PT: Rs480.
Taxotere (US$1.2 bn drug)—limited competition product, launch imminent
Five companies have filed ANDAs till date with Accord filing in early January 2011. We think
Hospira may enjoy some lead post launch in end-March 2011; however, SUN’s approval should
follow shortly after. Unlike street expectations of 30-month stay blocking SUN’s Taxotere till
January 2012E, we reiterate there is no 30-month stay and retain our assumption of a midFY2012E launch. While Hospira’s formulation is a single vial version, in line with branded product
which Sanofi has successfully converted to single vial, we believe with right pricing SUN should
garner meaningful sales in light of no additional competition likely in 2011E. We include US$70
mn sales in FY2012E (25% market share, 45% price erosion) for Taxotere.
Update on 3 other key products, launch date uncertain (hence not included in our FY2012E EPS)
We provide an update on three other products likely to be launched in FY2012/13E (1) Eloxatin:
On February 16, 2011, District Court of New Jersey issued an injunction preventing launch
by SUN till the court resolves all issues pertaining to settlement agreement. We believe launch by
SUNP is not likely until court decision/settlement is concluded, (2) Prandin: Latest Caraco filing
confirms this product site has been transferred from Caraco facility, we believe there is no
30-month stay and SUN may launch at risk. However, we await final approval before including
in our estimates (US$180 mn sales, SUN likely only filer), (3) Strattera: Eli Lilly had appealed the
lower court verdict, subsequently the Appeals court hearing was completed in December
2010. Even though SUN along with other generics have received final approval, the Appeals court
has granted an injunction that prevents the launch of generics until a ruling is rendered. We await
ruling and believe SUN will enjoy shared exclusivity along with 5-7 other companies.
William Blair documents give FY2012E sales estimates for Caraco as US$268 mn,
7% higher than our estimate
In December 2010, Caraco retained William Blair as an independent advisor to consideration
of Sun Pharma proposal to taking Caraco private which has since been concluded. Readthrough from the documents prepared by William Blair which contains sales estimates by
Caraco management and was presented to the Caraco board for consideration of SUN’s
proposal suggests:
(1) FY2011/12E sales estimates for Caraco are US$307 (in line with our estimate) and
US$268 mn, (7% higher than our estimate), possibly reflecting impact of higher
Taxotere sales.
(2) Gradual recovery in sales from Caraco plant with FY2012E sales at US$37 mn
versus US$23 mn in FY2011E, despite delay in resumption of manufacturing at the
plant.
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