Saturday, January 28, 2012

RDY - Generic Fondaparinux/Arixtra


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Dr Reddy's launched this product in Aug 2011. Before the launch, the product's 2011 US sales was trending towards 360m(with double digit growth rate). It is not unreasonable to expect that by Q1 of 2012 the product would capture market share of 30-35%. Apotex launched Authorized generic. So the market likely will be split between 3 players: Glaxo, Reddy's and Apotex. Assuming a 70% operating margin(this is not disclosed) and assuming pricing impact of 10%, Dr Reddy's-Alchemia combined profit would be around = 360m * 0.90 * 0.7 * 0.33 = ~75m
Dr Reddy's profit is 50% equal to 37.5m or 0.22$ per share for many years to come. There is no sign of generic competition for Arixtra. No ANDA has been filed yet by another company. The complex manufacturing of this product has been patented by Alchemia, Dr Reddy's partner which gives them protection until 2021. Also, note they are expected to file the same product in Europe in H1 2012
They also have unusually high limited competition product launches lined up for fiscal 2013(starts April 2012) -> Link .  Note they are one of the generics launching Lipitor in June after the 6 month exclusivity.


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