Wednesday, April 9, 2014

Stocks DD Cites: Sun-Ranbaxy Acquisition & Ranbaxy's US Derma Products

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Dilip Shanghvi on Sun-Ranbaxy Deal (interviewer asks stupid questions) -> Link

Why Ranbaxy acquisition is a game-changer for SUN
  • Ranbaxy is currently a distressed asset with USFDA issues and the current sales is very low compared to its true potential due to the fda ban on many of its plants
  • Ranbaxy sells in >100 markets in the world including many growing emerging markets. So SUN can cross-sell its products in these markets piggybacking on Ranbaxy already established sales/distribution channels
  • Ranbaxy has pipeline of 40+ ANDA including high value FTF's like Nexium
  • Ranbaxy even has branded products in the developed markets. SUN is good at capitalizing full sales potential for sole-competitor/low-competitor assets.
I wouldn't be surprised if SUN's market cap is many times its current market-cap in a few years just based of this huge value accretive deal for SUN's shareholders.

Ranbaxy's US Derma Products
We have a major focus in Dermatology with a presence across markets, including the US, India and Brazil. We have a robust franchise in the Corticosteroids, Anti-infectives and Anti-acne segments. Our current portfolio in the US caters to both prescription and consumer driven Over-the-Counter (OTC) markets, the major brands being Ultravate, Kenalog and Lac Hydrin. We have the global licensing rights to market Luliconazole (a novel Anti-fungal) in 16 markets, including India, Malaysia, Singapore and South Africa. 
Ranbaxty's Absorbica US sales were ~$60m.->
Quote: Acne drug Absorica, a generic version of isotretinoin, has been gaining market share since its launch in December 2012. The drug has a total market size of $1 billion (at the price of Absorica), which is growing at almost 15% annually. Absorica's market share in October was 19% and analysts expect it to touch around 24% by the end of 2013-14, given Ranbaxy's 30-month exclusivity period.
"The actual benefit of this will be visible only in CY14 as the company will be seeing over $200-million revenues from Absorica and most of its costs, especially branding and marketing cost, have already been incurred," said Singhal of Macquire. QUOTE
Considering the SUN-Ranbaxy deal, it will be interesting to see how these products will be sold/marketed in future in the US (and if Taro's brand would be leveraged?). Taro has a great, long-established brand in the US Dermatology both among practitioners and patients, although it primarily sells generics. 


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