Tuesday, March 22, 2011

Buy Ranbaxy - Many more First to File - Para IV opportunities ahead

The current negative sentiment presents a good opportunity to buy, as investors fail to recognize that there are three  major 180 day exclusivities waiting for Ranbaxy (Diovan, Valcyte amd Nexium) . These three opportunities put together constitute 25% of Ranbaxy's current M. Cap.  Ranbaxy will be the sole player for Diovan ($1b in US sales), Nexium ($2.4b in US sales)  and Valcyte ($400m in US sales) generics in the first six months. For Diovan and Valcyte, Ranbaxy will launch generic copies in 2013, and for Nexium in 2014.
Assuming 40 percent market share, 40 percent price erosion, 60 percent net margins and applying a 2x multiple to exclusivity earnings,  the cumulative net present value of these  these FTF opportunities for Ranbaxy is about $800m.