Cipla Gets U.S. FDA Nod For Generic Inhaler Amid Coronavirus Pandemic
Cipla is likely to benefit from two factors: limited competition and surge in demand due to the spread of Covid-19 in the U.S.
Cipla Ltd. has received the U.S. drug regulator’s approval to make the first generic of a commonly used inhaler to treat breathing difficulties as demand surges amid the coronavirus pandemic.
The U.S. Food and Drug Administration gave its final approval to the Mumbai-based company’s abbreviated new drug application for Albuterol Sulfate Inhalation Aerosol 90 mcg, according to an exchange filing. The copycat version of Merck Sharp & Dohme Corp.’s Proventil HFA Inhalation Aerosol is used to treat acute episodes of bronchospasm or prevention of asthmatic symptoms.
The American drug regulator recognised the increased demand for albuterol products during the novel coronavirus pandemic, U.S. FDA Commissioner Stephen M. Hahn said in a release. The novel virus, which so far infected over 1.5 million people worldwide, has a wide range of symptoms, including fever, coughing and breathing difficulties.
Umang Vohra, managing director and global chief executive officer at Cipla, said the company was planning shipments in a staggered manner.
Proventil HFA Inhalation Aerosol and its authorised generic equivalent, according to pharma researcher IMS Health, had U.S. sales of about $153 million for the 12 months ended February 2020. The entire Albuterol Sulfate HFA Inhalation Aerosol market had U.S. sales of close to $2.8 billion during the period.
The approval, Vohra said, strengthened the company’s presence in the U.S. market—that contributed 22 percent to Cipla’s revenue in the quarter ended December.
Reacting to the development, Cipla shares rose as much as 15 percent—the biggest single day jump since January 2005—to Rs 589.65 apiece. That compares with a 2.43 percent gain in the benchmark Nifty 50 Index.
Investec analyst Anshuman Gupta said the approval was a positive as it can add $60-70 million to Cipla’s U.S. sales. The company was expecting the approval only in the second half of 2020-21, Gupta said in a note.
According to Nomura, Cipla is likely to benefit from two factors: limited competition and a sudden surge in demand due to the spread of Covid-19 in the U.S. On expanded volumes, assuming 10 percent market share and 50 percent price erosion, analyst Saion Mukherjee said Cipla could achieve annualised sales run rate of $80 million in the initial period.
Bank of Baroda Capital Markets Ltd.’s Vivek Kumar, too, said there could be 50-60 percent price erosion, assuming a three-four player market.