Sunday, February 10, 2013

Will Sun Pharma Advanced Research Company Limited ( SPARC ) be eligible for a share in profits from Sun's Lipodox Sales in the US??

Recently Sun Pharma received USFDA approval for launching generic copy of  JNJ's Doxil (liposomal doxorubicin) in the US. While the approval has come in the name of Sun Pharma Global FZE', but if we do a patent search, the patents have been assigned in the name of Sun Pharma advanced search company (SPARC). Also the clinical trial meant to prove bioequivalence to JNJ's doxil was as well sponsored by SPARC
If there is a profit share that SPARC will get, it should hold significant value for SPARC shareholders. Generally for any late stage asset that is out licensed, the profit share could be as high as 50 percent.

What is the value of Generic Liposomal Doxorubicin

JNJ annually sells approximately $160m of Doxil in the US. Since the product is in shortage, Sun would be able to launch at a minor discount to branded version. Assuming 50 percent market share and 70 percent net margins, the product should fetch approximately $55 million for Sun Pharma in net profits. Assuming 50 percent profit share for SPARC, it should add about $27 million  to its bottomline (which is pretty significant for a company that is otherwise incurring losses).

The question is  what is the rightful share for SPARC in Lipodox?

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