Dr Reddy's Laboratories slipped a little over 10 percent in morning trade on Monday after the New Jersey District Court converted a temporary injunction into a preliminary injunction against the company that prevents it from launching generic Suboxone in the US market until patent litigation related to US Patent No. 9,931,305 is concluded.
Reacting to the news, Dr. Reddy’s Laboratories slipped as much as 10.7 percent in the first 15-minutes of trade. It was the top Nifty loser.
However, the drug maker on Saturday said it will appeal a decision of the US District Court of New Jersey about further sales and commercialisation of its generic Suboxone sublingual film in the US.
"The company disagrees with the court's decision, and will vigorously appeal it," Dr. Reddy's said in a disclosure to the exchanges. It intends to appeal the decision made by the court in a preliminary injunction hearing.
Dr Reddy's launched its generic buprenorphine/naloxone sublingual film or Suboxone "at-risk" in the US on Friday after it got a final approval from the US FDA on June 15.
Indivior, the innovator that was spun out from British drug maker Reckitt Benckiser, approached the court and secured an immediate injunction against Dr. Reddy's from launching the drug on grounds of pending patent litigation.
Suboxone, used in the treatment of opioid dependence, had US sales of around $1.86 billion for the 12 months ended April, according to IQVIA. The drug accounts for about 80 percent of Indivior's sales.
Here’s how top global brokerages reacted post the news:
Jefferies: Underperform| Reduce target to Rs 1,850 from Rs 1,910
Jefferies retain its underperform rating on Dr. Reddy’s Laboratories but reduced its target price to Rs 1850 from Rs 1910 earlier.
The company received a preliminary injunction against Suboxone generic launch. The injunction is a surprise as Indivior had to show that it can prevail in the patent hearing, said the note.
The global brokerage firm further added that the injunction adds to risks for FY2o-22 EPS estimates which have increased post the ruling.
Morgan Stanley: Overweight| Target: Rs 3,465
Morgan Stanley maintains an overweight rating on Dr. Reddy’s Laboratories with a target price of Rs 3465. The monetization timeline now gets delayed for Suboxone. The Court verdict contrary to the expectation of sales resumption said the note.
Nomura: Buy | Target Rs 2,704
Nomura maintains a buy call on Dr. Reddy’s Laboratories with a target price of Rs 2704. The preliminary injunction (PI) is in favour of Indivior and against Dr. Reddy's.
Dr. Reddy’s appeal on PI verdict will take 2-6 months, said the Nomura note. PI would adversely impact as competition could intensify for the drug. Nomura attributes 60 percent share for gSuboxone opportunity in price target.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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