Ranbaxy: Ceftin concerns - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Ranbaxy: Ceftin concerns

May 23, 2002

Ranbaxy stock has been battered (down 9%) in the last couple of days. Besides, the general market pessimism what could be adding to the selling is the recent results declared by Lupin Labs. Ranbaxy currently is the sole generic marketer of Cefuroxime Axetil in the US markets. On the other hand, Lupin Labs has a contract to supply bulk required for Cefuroxime formulations to Apotex, who is the next competitor of Ranbaxy. It may be recalled that Ranbaxy received FDA approval for marketing Cefuroxime Axetil tablets in the US markets after a prolonged legal battle. Ceftum (generic Cefuroxime) is a molecule with a market size of US$ 400 m. Though the approval does not ensure six-month marketing exclusivity for Ranbaxy, the only generic competitor, Apotex is still in the process of getting the relevant FDA approval. Currently, it is awaiting US FDA approval and a final settlement of its lawsuit with GlaxoSmithkline.

Ranbaxy got the approval for Cefuroxime in Feb'02 and has already enjoyed almost 3 months of exclusivity. Even after Apotex approval (which we expect in July'02) the market is expected to be a duopoly atleast for a year after that. Ranbaxy has currently captured more than 50% market share for the drug with the generic drug priced at 30% discount to the branded Ceftin.

However, results of Lupin Labs for the fourth quarter show sales of Cefuroxime Axetil in the API form. This could be an indication that Apotex is soon expected to launch the drug in the US, breaking the generic monopoly status for Ranbaxy. However, the entry of competition from Apotex seems to be in line with our expectation of July launch. Further, as mentioned earlier it is unlikely that a third player would enter the market before mid 2003 and thus price cuts are not expected to be steep. We have factored in competition in our FY03 earnings expectations and we maintain our consolidated global EPS estimates of Rs 35 on the company. At the current market price of Rs 778, the stock trades at 22x consolidated global earnings for FY03.

Equitymaster requests your view! Post a comment on "Ranbaxy: Ceftin concerns". Click here!


More Views on News

3 Indian Pharma Companies that are Investing Big Time for the Future (Views On News)

Nov 9, 2021

In 2021, R&D of pharma companies roared to life in a never-before-seen way.

Demerger of Financial & Pharma Businesses puts Piramal Enterprises in Limelight (Views On News)

Oct 8, 2021

The company's shareholders will be issued 4 shares in the demerged entity for every 1 held in Piramal Enterprises.

Block Deal Disappoints Max Healthcare Shareholders. Stock Falls 6% (Views On News)

Sep 30, 2021

The divestment of 6.6% stake by the promoter is considered to be one of the largest block deals of the market.

This Stock Just Made a Historical Debut on the Exchanges (Views On News)

Nov 15, 2021

Shares of the company listed at premium of 253% from its IPO price, the highest ever.

Krsnaa Diagnostics IPO Opens Tomorrow: Key Points to Consider (Views On News)

Aug 3, 2021

Krsnaa Diagnostics grey market premium is at around Rs 440 from its issue price of Rs 933-954.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 1, 2021 02:51 PM