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Dolat Capital: Dr Reddy’s Laboratories -  Company Update

Dolat Capital: Dr. Reddy’s Laboratories -Company Update

Capsules by Dr. Reddy’s Laboratories Ltd. are arranged for a photograph in Mumbai, India. (Photographer: Adeel Halim/Bloomberg)  
Capsules by Dr. Reddy’s Laboratories Ltd. are arranged for a photograph in Mumbai, India. (Photographer: Adeel Halim/Bloomberg)  

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Dolat Capital Report

Dr. Reddy’s Laboratories Ltd. settles with Bristol Myers Squibb Laboratories on multiple myeloma drug, Revlimid for a limited volume launch during FY23-26, post which the volume cap will be lifted.

Dr. Reddy’s is the third company to settle post Natco and Alvogen, though details of the settlement term are not known yet.

The key variables are 1. timing of the launch 2. market share allowed to Dr. Reddy’s.

Given the uncertainties around generic entries and potential settlements that could materialise over next two years, we factor in a worst-case scenario of all generics entering the market at the outset in FY23 (post Natco launch in March-2022).

We estimate the market size to be large at 8 billion U.S. dollar in FY23 (given its growth and current run rate of 7 billion U.S. dollar).

We assume all eight generic launches in FY23, leading to high erosion of 80% and estimated share of 10% for Dr. Reddy’s in the eight player market.

The Ebitda margin should still be high, given the large size of the drug, at 90%.

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Dolat Capital Dr Reddys Laboratories Event Update.pdf

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