Dr. Reddy’s Laboratories (RDY) recently announced the launch of generic version of Novartis AG’s (NVS) blood pressure drug, Lotrel, in the US.
Dr Reddy’s abbreviated new drug application (ANDA) for the generic version of Lotrel (amlodipine besylate and benazepril hydrochloride capsules; 5 mg/40 mg and 10 mg/40 mg), was approved by the US Food and Drug Application (FDA) on July 5, 2011.
According to IMS Health, total US sales of Lotrel amounted to $290 million for the twelve months ended March 31, 2011.
Last month, Dr Reddy’s had announced the launch of its generic version of Johnson & Johnson’s (JNJ) antibiotic drug, Levaquin, in the US. Additionally in June, the company announced the launch of three other generic products in the US. Dr Reddy’s launched the generic versions of Pfizer Inc.’s (PFE) anti-depressant, Effexor XR, Eisai Co. Ltd.’s Alzheimer’s treatment, Aricept, and Novartis’ breast cancer treatment, Femara.
We believe that these launches will bring in additional revenues for Dr. Reddy’s Global Generics segment, which recorded sales of $1.2 billion in fiscal 2011 (ending March 31, 2011), reflecting a year-over-year increase of 10%.
However, we note that while generics revenues increased 18% in North America, 19% in Russia and other CIS (Commonwealth of Independent States) markets, and 15% in India, the generic revenues slid 13% in Europe in fiscal 2011. In the European market, Germany was worst hit, with a 25% drop (due to a decline in the Euro currency), partly mitigated by the rest of Europe experiencing a 27% rise.
Further, during fiscal 2011, Dr. Reddy’s had launched 135 new generic products, filed 107 new product registrations, and 56 drug master files (DMF) globally. At the end of fiscal 2011, total ANDAs awaiting FDA approval were 75, of which 37 were paragraph IV filings and 10 were first-to-file.
Our Take
We currently have a Neutral recommendation on Dr. Reddy’s. The company carries a Zacks #3 Rank (Hold rating) in the short run. We believe Dr. Reddy’s is in a strong position to benefit from the huge opportunity the US generics market has to offer, as drugs with sales of about $75 billion are slated to lose patent exclusivity in the coming years.
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