Dr. Reddy’s Laboratories (RDY) recently announced the US launch of its generic version of UCB’s (UCBJF) Xyzal. The drug is marketed in the US for the relief of symptoms associated with seasonal and perennial allergic rhinitis and the treatment of uncomplicated skin manifestations of chronic idiopathic urticaria.
The company received US Food and Drug Administration’s (FDA) approval for the 5 mg dosage strength of its generic version in February.
Earlier, in January, Dr. Reddy’s reported third quarter fiscal 2011 earnings per American Depository Share (ADS) of 40 cents compared with a loss per ADS of 70 cents in the year-ago period. Higher revenues helped boost earnings.
The company reported quarterly revenues of $424 million, up 10%. Dr. Reddy’s reports revenues under two segments – Global Generics and Pharmaceutical Services & Active Ingredients (PSAI). Revenues at the Global Generics segment went up 16% (on INR basis) to $303 million, while PSAI revenues declined 5% (on INR basis) to $111 million, during the third quarter.
Generics revenues (on INR basis) increased 60% in North America, 7% in Russia and 14% in India, while it declined 18% in Europe and 11% in other CIS markets. The European market recorded the highest decline among all the regions with Germany being the worst hit with a 33% drop (on INR basis), partly mitigated by the rest of Europe experiencing a 39% increase.
We note that during the quarter, Dr. Reddy’s launched 42 new generic products and filed 6 abbreviated new drug applications (ANDAs), bringing the total number of ANDAs pending FDA approval to 74. Of the 74 ANDAs, 32 are Para IV filings and 12 are first-to-file.
Our Take
We currently have a Neutral recommendation on Dr. Reddy’s. We believe the company is in a strong position to benefit from the huge potential in the US generics market, as drugs representing sales of about $75 billion are slated to lose patent exclusivity in the coming years.
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