New Delhi: A day after it announced a truce on its patent lawsuit on Pfizer Inc.’s cholesterol drug Lipitor, investors pushed down shares of India’s biggest drug maker, Ranbaxy Laboratories Ltd. The scrip dived 7.68% to close at Rs 552.25 on the Bombay Stock Exchange at the end of trading on Thursday.
The broader market, measured by the benchmark index of the Bombay Stock Exchange, closed at 15,087.99 points, lower by 2.17%. Daiichi Sankyo Co. Ltd is seeking a majority control in the Gurgaon-based drug maker after buying out the promoter Singh family’s 34.8% for a little less thanRs10,000 crore.
Ranbaxy’s research centre in Gurgaon. Analysts say its stock slumped due to delay in expected revenues?from Lipitor?copies (Photo by: Bloomberg)
Analysts attribute the slump on the Ranbaxy counter to the delay in expected revenues from Lipitor copies. Also, it became evident Thursday that there could be another non-patented drug company authorized by Pfizer to sell Lipitor copies in the US market when Ranbaxy launches the drug in November 2011. This will increase price erosion on the $12.7 billion (Rs54,483 crore) drug and competition could eat into Ranbaxy’s market share in the six-month limited competition run, spread over 2011 and 2012.
Ranbaxy’s shares had touched a 52-week high of Rs613.70 in early trades on Thursday.
Mumbai-based Hemant Bakhru, sector analyst with CLSA India, has called the Lipitor deal “a dampener” and “a huge gain for Pfizer” in his report. He has written that the Lipitor settlement gave “Pfizer a lot in terms of profits as it delays the generic entry by 20 months, yet denies Ranbaxy any incremental benefit”.
The multi-country, multi-product legal settlement between the two drug makers spanned 12 countries and could potentially result in over $ 1.5 billion revenues in future for the Indian drug maker, which was planning to launch the cheaper versions of atorvastatin, sold under the brand Lipitor, in March 2010 in the US, which accounts for $8 billion sales.