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Glenmark Pharmaceuticals has initiated phase three of clinical trials in India on antiviral tablet Favipiravir. (ANI)
Glenmark Pharmaceuticals has initiated phase three of clinical trials in India on antiviral tablet Favipiravir. (ANI)

Glenmark’s Fabiflu is first in the market, but has limited growth opportunity

  • The drug is priced at 103 per tablet, while Glenmark has the first-mover advantage
  • Incremental revenues of Rs200 crore-300 crore could accrue, say some analysts, although it’s more of a guesstimate given the many variables

Glenmark Pharmaceuticals Ltd’s launch of the antiviral favipiravir, named Fabiflu, has sent its stock price soaring. But Monday’s rise of about 30% should be seen in the context of the market potential of the drug and that does not quite justify the sharp jump.

The drug is priced at 103 per tablet, and Glenmark has the first-mover advantage. But the revenue potential of the drug depends on the infection rate and the adoption of the drug as a treatment.

“This appears to be a one-time opportunity only for covid times. Multiple players are set to launch the product over the next 12 months given that there are no patents in India," said Anshuman Gupta, pharma analyst, Investec Securities.

Pandemic Boost
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Pandemic Boost

As such, the revenue potential is expected to dip once competition kicks in. In the coming months, a large number of players are expected to launch the drug in India. Some manufacturers in India are already exporting this drug to the UAE and Nepal. Incremental revenues of 200-300 crore could accrue, said some analysts, although it’s more of a guesstimate, given the many variables. Against that backdrop, the over 3,000 crore jump in Glenmark’s market cap clearly looks overdone. Further, studies are still being held on the drug’s efficacy for covid treatment.

“The international clinical trials, which served as the basis for the approval, include small sample size and are from semi-regulated markets such as Russia, China and UAE. Japan, where the drug is officially approved for resistant flu, has not approved the drug for coviddue to lack of efficacy data," said Kunal Dhamesha, pharma analyst, Systematix Securities.

Besides, much will depend on how effective the drug is in clinical trials in India. Glenmark has said that it will begin a new clinical trial in the country to test a combination of two anti-viral drugs, favipiravir and umifenovir, as a potential covid-19 treatment.

In addition, a high pill burden may be a deterrent. Patients need to take about 18 tablets on day one and eight tablets thereafter for up to 13 days. This makes the overall cost of the treatment quite high for most Indians. Of course, the government could step in as a buyer, which would further lower the margins on this drug.

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