Friday, April 29, 2011

Buy Ranbaxy - Federal Judge to rule on Mylan-FDA case early next week


A federal judge will decide early next week whether to end Mylan Inc.'s (MYL) legal maneuvering aimed at improving the chance it could sell a generic version of Pfizer Inc.'s (PFE) blockbuster cholesterol-lowering drug Lipitor as early as June. It is widely expected that the decision is likely to be in favor of the USFDA, and hence Ranbaxy. A decision in favor of the USFDA would imply Ranbaxy is likely to retain its lipitor 180-day exclusivity, which is a $800m NPV opportunity (20% of current M.Cap). Lipitor is likely to be a low competition window for generic players, as Para III filers entry is likely to be delayed, as later expiring patent on Lipitor are yet to be invalidated.  The other important FTF opportunities in the offing for Ranbaxy are Diovan (Mar -12), Actos (Aug-12) and Provigil ,and should cumulatively add another $800m-$1000m to Ranbaxy’s NPV. As far as FTF opportunities over the next few years are concerned, Ranbaxy is best poised among Indian pharma companies.