Monday, September 10, 2012

Speculation - Panacea Biotec gets approval for Tacrolimus in US

Panacea Biotec is up 20%  on rumors that Tacrolimus is  the first generic approval for Panacea in the US. Prograf sells around $370m in the US. The opportunity could potentially fetch Panacea $25m in annual sales. It all depends on how much substitution happens. There are four other players marketing generic Tacrolimus in the US. Branded Tacrolimus (Prograf) continues to take 45% market share despite generic entry. Hence the potential is huge, it all depends on how much substitution will happen.
Since this is the first ANDA approval for Panacea, they might need a partner  for distribution and marketing in the US, which could potentially dilute the potential profits.
Panacea is also facing plant related issues (vaccine) and hence incurring significant losses. It is almost burning 200 crores in cash annually. If these issues are not resolved in reasonable time, we will see its networth getting significantly eroded. If it runs out of cash, equity dilution would be a blow to shareholders. It is expected that the vaccine plant should restart in the next few months.