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Alembic Pharmaceuticals Ltd announcement on tentative approval for Dronedarone Tablets, 400 mg, should add to the earnings outlook for the company. The product has an estimated market size of $500 million for twelve months ending September 2021, according to IQVIA. 

Alembic has settled the case with Sanofi-Aventis and will launch its generic as per the terms of the settlement.

The company’s U.S. sales outlook is improving gradually with the company receiving multiple approvals for launches in the U.S. The company has received 19 approvals (13 final approvals and 6 tentative approvals during the financial year and the launches can help improve the company's US sales trajectory. The US sales of Alembic have remained under pressure for some time. The company that had benefited from the strong product launch momentum and drug shortages in the US during FY21 however saw competitive intensity increase for key products. Though the company’s US pipeline remained strong, nevertheless it was the pricing pressure in Sartans (hypertension treatment drugs) that led to the pressure in the US sales.

Alembic’s revenue from the international generics segment had grown impressively at a 35% CAGR (compound annual growth) over FY2018-21, helped by US sales growth of 33% CAGR as per analysts’ data, however, came under pressure during the first half FY22. The Q1FY22 and Q2FY22 exports declined 30.0% year-on-year and 12.6% respectively. Analysts however in the back of rising product approvals and thereby expected pickup in launches remain optimistic on growth.

“Going ahead, Alembic sees the US sales to bottom out and stage an improvement, driven by growth in base business and strong new product launch pipeline including products approved but yet to be commercialized," said analysts at Sharekhan.

The company also had been investing in niche products as injectables that should support the company tide over the higher competition in the base business. In this regard, clearance of the company's F3 facility by the USFDA (US drug regulator) for exports of ophthalmic products, general injectables remains important. Analysts at Sharekhan say that USFDA observations received for the F3 plant are procedural in nature and the management seems confident of a resolution. While the receipt of observations could delay growth plans, a resolution could be a potential growth driver, say analysts.

The stock is down 27% from the 52-week highs seen in January last year.

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