Will Delays In Launch Of Amneal’s Generic NuvaRing Help Dr. Reddy’s?

Amneal Pharmaceuticals Inc. has said its planned launch of key generics, including a female contraceptive, in the U.S. is facing delays. That may be a window of opportunity for Dr. Reddy’s Laboratories Ltd. in its largest market.

In a statement on Wednesday, the New Jersey-based drugmaker said that among its product launches facing delays was its version of NuvaRing—a vaginal ring to prevent pregnancy. It had earlier hoped to launch the product in the middle of the year.

The delay has prompted Amneal to cut its 2019 Ebitda guidance to $450 million from $625 million. The generics firm is also restructuring its business, in a plan that's expected to save the company $50 million a year.

During a March quarter earnings call, Dr. Reddy’s had told BloombergQuint that it would launch the NuvaRing generic in the U.S. market this year.

Developed by drugmaker Merck & Co., NuvaRing at present doesn’t have any approved generic variants in the U.S. A CLSA report pegs its market size in the country at $790 million. Teva Pharmaceutical Industries Ltd., Mayne Pharma Group Ltd., as well as Amneal and Dr. Reddy’s, have applied to the U.S. FDA to make the generic for the American market.

Amneal, according to Credit Suisse estimates, has around 4 percent share of the U.S. generics market—greater than its Indian peers like Lupin Ltd. and Dr Reddy’s.

Any delay beyond Dr. Reddy’s launch would be a positive, Prashant Nair, deputy head of India research at Citi India, said in a report, adding that he isn’t sure how long Amneal’s product could get delayed. He cited lower pricing pressure upfront and better market share prospects as advantages to the Hyderabad-based drugmaker. Citi also estimates the NuvaRing generic to generate sales of $49 million in FY20 and $65 million in FY21 for Dr. Reddy’s.

If Dr. Reddy’s gets approval for the product in time, they will enjoy better economics, Anshuman Gupta, pharma analyst at financial services firm Investec India, said in a note. But there’s a chance the approval could get delayed, he added.

It’s not clear whether Amneal’s delay is due to company-specific reasons or whether it could impact approval timelines for all generics, Anubhav Aggarwal, director and healthcare analyst at Credit Suisse, said in a report. In case it’s the former, then its positive for Dr. Reddy’s and negative if it’s the latter, Aggarwal said.

While Bank of America Merrill Lynch sees a launch in the second half of the year to be a catalyst for Dr. Reddy’s, Antique Stock Broking Ltd. and IIFL Finance Ltd. highlighted concerns over delays in key drugs like the NuvaRing generic and Copaxone.