Shares of pharmaceutical major Dr. Reddy’s Laboratories Ltd. fell as much as 3.9 percent to Rs 2,799 during early trade on February 16, its biggest drop since November 9, after the company announced a U.S. District Court's opinion on it relating to patent infringement.
U.S. district court of New Jersey ruled that Dr. Reddy’s proposed palonosetron hydrochloride 0.25 mg/5 ml product infringes certain patent claims, the company said in a statement to exchanges. The court held the existing patents valid.
The patent pertains to Helsinn Healthcare’s Aloxi injection used to prevent nausea and vomiting caused by surgery, or by receiving medicine to treat cancer (chemotherapy).
The drug is estimated to have a market size of nearly $500 million in the U.S., Surajit Pal, analyst, Prabhudas Lilladher told BloombergQuint. The product was to be launched in financial year 2017-18, where analysts had pencilled in about $30 million of revenues. While the earnings impact may not be significant, a litigation win and successful launch would have been a strong sentiment booster in FY18 given the current paucity of launches.
We are disappointed in the decision and intend to pursue an appeal in due course.Dr. Reddy’s Spokesperson
Dr. Reddy's surpassed analysts’ estimates in the October to December quarter, despite the 15.9 percent drop in its net profit to Rs 492.30 crore. Brokerages raised the red flag on the management’s guidance for a softer fourth quarter and the uncertainty around certain important launches in the U.S. Expensive valuations and the U.S. Food and Drug Administration’s (FDA) re-inspection of three manufacturing facilities are also expected to remain an overhang for the stock in the near-term, analysts had said.
The U.S. FDA is scheduled to re-inspect three manufacturing facilities--Duvvada and Srikakulam in Andhra Pradesh, and Miryalaguda in Telangana --in February and March 2017.
Shares of Dr. Reddy’s Laboratories were trading 0.47 percent lower at Rs 2,897 on the BSE at 12:50 p.m.
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