Wednesday, September 14, 2011

Ind-Swift Limited is a good proxy for somebody who wants to play the upside from atorvastatin generic launch in the US

With Ranbaxy facing threat of penal charges from the USFDA, Ind-Swift Limited is a good proxy for somebody who wants to play the upside from atorvastatin generic launch in the US –  Ranbaxy is in advanced talks with Ind-Swift Limited for sourcing atorvastatin final API /  intermediates for its proposed US launch. With API cost being typically 20% of the generic formulation selling price and the cumulative generic formulation sales opportunity for Ranbaxy is about $1.5b and hence the  API opportunity is close to $300m ( ~ INR 1350 crore). Beyond Atorvastatin, ISLL is also targeting several other blockbuster products and have very well established tie-ups with major generic players. The fruits for R&D are just around the corner for ISLL and 2011 is the beginning of ISLL R&D journey.

Why Atorvastain is a very big opportunity for Ranbaxy
  • US branded sales of atorvastatin is $5.5billion
  • Ranbaxy being the first to file, should garner  major market share in the atorvastatin generic market.
  • Atorvastatin volumes may more than double post patent expiry driven by therapeutic substitution. What we can draw from the recent data from SATURN study, in which rosuvastatin (Crestor)  failed to show superiority over atorvastatin in reducing atherosclerotic plaque volume as measured by IVUS, is that therapeutic substitution is going to be significant.  Lipitor will substitute prescriptions of simvastatin, Vytorin and rosuvastatin and we expect market share to reach around 40% of the stain market.
  • Atrovastatin generic is a low competition window (other generic companies cannot enter by Para III route after 180 days exclusivity expiry,  hence Ranbaxy may be able to sustain its market share  for a longer duration as compared to what we have seen for other FTF opportunities
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