Tuesday, March 22, 2011

Mylan Threat to Ranbaxy is unreal. Buy Ranbaxy now, risk reward profile is positive, as Lipitor as such is out of the current price

Ranbaxy has multiple options to make money from the Lipitor Exclusivity. If Mylan loses the litigation, Ranbaxy will launch the the generics as per expected timelines ( November 2011). In case Mylan wins the litigation, Ranbaxy would still have the option to sell its exclusivity or transfer the manufacturing of Lipitor to an alternate site. I am optimsitic that Ranbaxy would neither have to resort to any of these measures as I expect the Paonta sahib facility issue to be resolved by June.  FDA has already initiated the procedure of validating the Paonta sahib manufacturing site and a decision should be available by June this year.  Lipitor generics can create huge savings for the US economy and in the interest of the nation, the FDA is likely to hasten its validation procedure.

The worst case, in case of Ranbaxy is that the FDA dismisses its ANDA application and in that case Ranbaxy will lose its 180 days exclusivity. But such a scenario is well price into the stock.

2 comments:

  1. "I expect the Paonta sahib facility issue to be resolved by June"--- are u still sharing the same optimisiom.

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  2. Samir, I share your view on this. There are several reasons to believe so. Primarily it is difficult to believe that an Indian company whose core strenght is creating and managing regulatory compliant manufacturing facilities, failing to resolve the issues. As far as AIP enforcement is concerned, had FDA wanted to do so, they would have had done it long back. It is rumored, FDA is negotiating a penalty with Ranbaxy. The $1billion number quoted in Forbes seems ridiculouS. If FDA choses, to levy such a hefty fine, it would in a way be endangering access to cheap generic medicines for its own population in the US. All in all, i see no reason for Ranbaxy, no getting out of this mess. Keeping my fingers crossed

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