Divi's Lab stock slips on US supply worries

Mumbai: Shares of Divi's Laboratories fell as much as 6.2% on Thursday after the US Appellate Court rejected Novartis's attempt to block generic manufacturing of Entresto, which is a patented heart failure medication by Novartis. Divi's has a CDMO (Contract Development and Manufacturing Organization) contract with Novartis for supplying Entresto's API (Active Pharmaceutical Ingredient), the primary content of a drug. The stock ended 2.6% lower at ₹6,096

"This ruling was on expected lines as the street was factoring it from FY25. Entresto is one of the key drugs in Divi's CDMO portfolio.The generic entry may impact volume offtake for Divi's to some extent," said Param Desai, research analyst at PL Capital- Prabhudas Lilladher. Entresto generated approximately $6 billion in annual sales globally in 2023.

"While the exact revenue from Entresto-related supplies is undisclosed, it contributes a meaningful share to the overall business. However, before the rejection by the US Appellate, the management of Divis had claimed that there won't be any material impact of this news on the company," T Manish, research analyst at Samco Securities.