Source : 'Scrip Intelligence'
Dr. Reddy's Laboratories Ltd. rang in a strong fiscal fourth quarter, buoyed in part by COVID-19-related stocking up in the US and a string of new product introductions there, but sharp gains in the Europe business stood out as well.
Revenues from the North America generics business rose 21% to INR18.1bn ($238m) during the fourth quarter of fiscal 2020 amid increased volumes for existing products, while new introductions such as generic versions of Vimovo (naproxen and esomeprazole magnesium delayed-release tablets) and Daraprim (pyrimethamine) and naloxone HCL injection (which has a Competitive Generic Therapy designation from the US Food and Drug Administration) also added to the momentum. The CGT designation provides 180-day exclusivity to market the product.
Dr. Reddy’s CEO Erez Israeli indicated that the overall increase in demand was driven by stocking by patients and inventory build-up by customers due to the global COVID-19 lock-downs and that the firm also benefited from continued activity on new product launches, coupled with "favorable market share gains" across some of key products including generic Suboxone (buprenorphine and naloxone).
“We expect the new launches momentum to continue during the year with about 25 product launches lined up, despite uncertainties due to COVID-19,” Israeli said on the earnings call post market hours on 20 May.
Earlier this month, the Hyderabad-based firm received US approval for its NDA for Elyxyb (celecoxib oral solution 25 mg/mL), in the US and expects to commercialize the product through partners. Elyxyb (previously known as DFN-15) is indicated for acute treatment of migraine with or without aura in adults.
The company, however, also indicated that it was working on the FDA complete response letters for generic Copaxone (glatiramer acetate injection) and generic NuvaRing (etonogestrel/ethinylestradiol) and expects to make submissions “within the next few weeks and months” but provided no further specifics.
While there are generic rivals to Teva Pharmaceutical Industries Ltd.’s Copaxone, the Israeli firm had earlier this year sued the FDA for excluding the product from the BLA transition list. ("Teva Sues FDA For Excluding Copaxone From BLA Transition" "Generics Bulletin" )
Late last year, Amneal Pharmaceuticals LLC launched the first generic rival to Merck & Co. Inc.’s NuvaRing vaginal ring, followed by the launch of an authorized generic version of the product in the US by Prasco Laboratories soon after. ("Prasco Has Authorized Generic NuvaRing" "Generics Bulletin" )
In the third quarter, Dr. Reddy’s took an impairment charge of $156.5m following the launch of the generic and authorized generic for Nuvaring, given that the developments had led to “considerable erosion in the value of this product for us.” ("Dr Reddys Posts Surprise Q3 Loss But Strong Operating Results Boost Shares" "Scrip" )
“We expect US sales of $1.1bn by FY2022 (10% CAGR over FY2020, 5% ex-Copaxone, Nuvaring),” BOB Capital Markets Limited said in its results review on 20 May, adding that the US and EU businesses offset weakness in India and PSAI (pharmaceutical services and active ingredients) sales on account of logistics-related disruption caused by the lock-down to control the spread of COVID-19.
Dr. Reddy's overall revenues for the fourth quarter rose 10% to INR44.32bn, while profits stood at INR7.64bn (+76%).
Meanwhile, Dr. Reddy’s Europe business reported strong growth during the fourth quarter, with revenues up 80% to INR3.4bn, albeit on a relatively small base; on a full-year basis, revenues stood at INR11.7bn (+49%).
The performance was driven by an improvement in the base business, new product launches and ramp-up in three newer markets - France, Italy, and Spain. The fourth quarter saw the launch of one product in Germany, three in the UK and two each in France, Italy and Spain.
“It was a better performance of the European teams in five countries, primarily in Germany. The current year has really reset a new base for this business and we look forward to continue our growth from hereon,” Israeli said on the call.
The CEO also indicated that the company expects to leverage its portfolio globally and the products launched in Europe were primarily those that “we have also in the US or will have in the US. And we will have much more in the US and we will have much more in Europe. We just started to expand in Europe,” Israeli explained in response to an analyst’s query on the “long runway to go” in terms of product launches, given the firm has a large portfolio in the US.
The firm’s 2019 North American generics product catalog indicates that for prescription products the firm has over 80 SKUs (stock keeping units) marketed under the Dr. Reddy’s label in over 350 dosing presentations, while for over-the-counter products approximately 200 private or “control label” OTC packaging presentations are available there.
As of 31 March 2020, Dr. Reddy’s cumulatively had 99 generic filings pending for approval with the US FDA (97 ANDAs and two NDAs under the 505(b)(2) route).
Meanwhile, the company did not share many details around its plans in China, a market where it has a long-standing base and has been bullish about, at least in the pre-pandemic scenario.
Israeli maintained that China is still a “very important market” for the company and it has ramped up activities there. “We are not sharing yet the specific numbers for China but let's say the strategy that I communicated in the last [J.P. Morgan Healthcare Conference] meeting in San Francisco is still valid,” he added.
A presentation by the company at the JPM meeting in January noted that it expects to extend its US portfolio to China, benefiting from the evolving regulatory framework there. Dr Reddy’s believes that an estimated 70 products from its US portfolio can meet China’s new regulatory requirements and registration, it had said, was underway for some products. ("Dr Reddys Focuses On India And China" "Generics Bulletin" )
Last year, the Indian firm won a bid for olanzapine 10mg in China, setting the ball rolling as part of efforts to “go big” in that market.
By Anju Ghangurde