Dr. Reddy’s Laboratories (RDY) recently announced the US launch of its generic version of Pfizer Inc.‘s (PFE) antipsychotic drug, Geodon (ziprasidone). Earlier this month, the US Food and Drug Administration (FDA) had approved Dr. Reddy’s abbreviated new drug application (ANDA) for the generic drug.
Geodon is approved for the treatment of schizophrenia and bipolar disorder.
According to IMS Health, US sales of Geodon amounted to about $1.34 billion for the twelve months ended December 31, 2011.
We expect generic launches at regular intervals to add to Dr. Reddy’sGlobal Generic revenues, which soared 57% year-over-year to $402 million in the third quarter of fiscal 2012.
During the reported quarter, generics’ revenues climbed 133% in North America, 15% in Russia and other CIS (Commonwealth of Independent States) markets, 14% in Europe and 11% in India. Growth was mainly driven by the launch of a generic version of Eli Lilly & Co.‘s (LLY) Zyprexa (olanzapine) 20 mg.
Dr. Reddy’s currently has 180-day marketing exclusivity for Zyprexa. Therefore, since generic Zyprexa was launched in the third quarter of fiscal 2012, the exclusivity runs till the fourth quarter of fiscal 2012.
Our Take
We currently have a Neutral recommendation on Dr. Reddy’s. The stock carries a Zacks #2 Rank (Buy rating) in the short-run. We believe Dr. Reddy’s is in a strong position to benefit from the huge potential presented by the US generics market, as quite a few blockbuster drugs such as Johnson & Johnson‘s (JNJ) Concerta and Pfizer’s Lipitor have lost patent exclusivity and more drugs are slated to go off-patent in the coming years.
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