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.