Ranbaxy gains over 5% in trade; drug release on track

NEW DELHI: Shares of Ranbaxy Laboratories climbed over 5 per cent in trade on Thursday on reports that the company will release a generic version of the blockbuster cholesterol-lowering drug Lipitor in the United States by end-November.

Tsutomu Une, the chairman of the board of the Indian generic drug maker, said there is no change to the timetable for launch of the drug, according to a Reuters report.

“Une also dismissed speculation that Ranbaxy would sell its marketing rights to another firm,” the report added.

The cholesterol-lowering drug Lipitor is the world’s largest selling drug and it loses patent protection in the US in November this year.

Ranbaxy’s scheduled launch of the drug has been clouded by speculation that regulatory troubles could derail its plans.

“The more the company delays in getting the approval, the move could adversely affect the company in gaining market share. The company has a good chance of gaining 30-40% market share”, said Surajit Pal of Elara Capital in an interview with ET Now.

“If the company delays its launch, there is a possibility most of the retail chains would have tied up with other manufacturers such as Pfizer,” added Surajit.

At 12:45 p.m., the shares of the company were trading 4.5% higher at Rs 507.95. However, for the year the stock has corrected a little over 15%.

The company will have 180-day exclusive US sales rights for marketing Lipitor, from November 25, and the company is expected to earn $500 million from Lipitor in that exclusivity period.

“According to estimates, Ranbaxy could command Rs 25-27 EPS in the exclusivity period. However, this would only be a one time gain and the current market price has already priced in any gain for the company”, said Surajit.

“The current price is anyways higher than our estimated price target,” added Surajit. Elara Capital values Ranbaxy at Rs 350 with Rs 300 for its base business and additional Rs 50 for exclusivity business.