Dr. Reddy’s Bid To Revive Growth In Its Largest Market At Risk
The uncertainty over the U.S. government shutdown may affect Dr. Reddy’s Laboratories Ltd.’s plans to gain first-mover advantage in the country’s market for generics of the opioid treatment drug Suboxone Film.
India’s third-largest drugmaker by market value was betting on sales of copies of Indivior Plc.’s blockbuster drug to revive growth in the U.S.—its largest market. The opportunity now seems less attractive with other companies getting approval to sell the drug—brand sales for which is estimated at $900 million—and the shutdown delaying verdict on Indivior’s petition contesting the permit to Dr. Reddy’s.
Analysts had estimated a sales opportunity of $100 million for Dr. Reddy’s assuming limited competition. The brokerage Investec said the recent spate of approvals for other companies to market the drug could shorten the period of high profitability for Dr. Reddy’s, hurting overall economics. It said the overall opportunity would be reduced significantly by second quarter of FY20, with four to five players and reduced market size.
Anshuman Gupta of Investec said the market will shrink further if Dublin-based Endo Pharmaceuticals Inc. launches the drug. As of now, Alvogen Pharma US Inc. and Mylan NV have secured approval to market the drug apart from Dr. Reddy’s.
A U.S. court, in a 2-1 ruling in November last year, allowed Dr. Reddy’s to sell gSuboxone in the country. The Hyderabad-based drugmaker had then said in an exchange filing it would resume sales as soon as a preliminary injunction by Indivior was vacated. A month later, a U.S. court rejected Dr. Reddy’s request to issue a mandate to vacate the preliminary injunction. This prevented the company from marketing the product immediately.
Investec also highlighted that labels posted on DailyMeds, a website operated by the U.S. National Library of Medicine, indicate that Sandoz Inc. has been confirmed as the authorised generic for Suboxone. An authorised generic is the brand company’s own product that’s repackaged and marketed as a generic drug either through a subsidiary or a third party. This helps the innovator gain better market share but at reduced profit.
BloombergQuint is awaiting a response from the drugmaker on its email queries.
Shares of Dr. Reddy’s Laboratories Ltd. gained over 8 percent in 2018, compared with the the BSE Healthcare Index’s near 6 percent decline.
JPMorgan said Dr. Reddy’s could launch the drug before February, raking in sales of $30 million this fiscal. The drugmaker said as much at the JPMorgan Healthcare Conference early this month, predicting a launch as early as January-end. Edelweiss and Equirus estimate the drug to be a $100 million opportunity for the company annually.
Erez Israeli, chief operating officer of Dr. Reddy’s, told BloombergQuint after the second-quarter earnings that drugs like Suboxone, Copaxone and Nuvaring will be crucial for growth in the U.S., where Indian drugmakers are facing pricing pressure.
Alvogen received Abbreviated New Drug Application approval to market the drug last week. It won’t be able to launch the drug as Indivior filed a temporary restraining order against the firm.
Morgan Stanley’s Sameer Baisiwala said in a report the temporary restraining order should prohibit Alvogen from launching the drug until the preliminary injunction is decided upon. Hearing for the same is Feb. 7.