Shares of Natco Pharma Ltd. gained nearly 9% after it launched a generic of a key blood cancer pill in the U.S., and on ICICI Securities' upgrade.
The Hyderabad-based drugmaker, along with its marketing partner Arrow International Ltd. (an affiliate of Teva Pharmaceutical Industries Ltd.), launched the first copy-cat version of Revlimid (lenalidomide) capsules in the American market, according to its exchange filing on March 7.
Revlimid—available in 5 mg, 10 mg, 15 mg, and 25 mg strengths—is prescribed for treating patients with multiple myeloma (cancer of the plasma cells, that is white blood cells) or myelodysplastic syndromes. The drug is used to slow down or stop growth of cancer cells, as well as to treat anemia in patients with certain bone marrow disorders.
“It has a market size of around $8.5-9 billion in the U.S.,” Vishal Manchanda, pharma analyst at Nirmal Bang, told BloombergQuint. Natco Pharma, he said, had obtained a volume-limited licence from Celgene—now a part of Bristol-Myers Squibb. Under the licence, the company will be gradually allowed to ramp up market share up to a third by 2025.
Natco Pharma earned 31% of its FY21 revenue from international exports. The company targets therapy areas of oncology, central nervous system and anti-virals in the U.S. market. It has 25 active commercial products as on March 31, 2021, in the U.S.
Separately, ICICI Securities upgraded the stock to ‘buy' from ‘add' with a price target of Rs 1,021 apiece—an implied return of 20.92%.
Key highlights by the brokerage
More than 15 companies had filed for Revlimid, but Dr Reddy's and Natco Pharma are the only ones to receive product approval.
Dr. Reddy's will be the second to launch Revlimid in the U.S. with exclusivity for two strengths (2.5mg and 20mg).
Post January 2026, there would not be any market share constraint. (gradual increase to 33% in final year of exclusivity - FY26).
Positive on the long-term outlook driven by its strong U.S. pipeline, including opportunities like Revlimid and Imbruvica, profit share from recently launched limited competition products, expected recovery in domestic business on the back of new launches and incremental sales from the agro-chemical business, and targeted approach in new export markets.
Post recent stock price correction, upgraded Natco Pharma to buy.
Key downside risks: Delay in U.S. launches and increasing competition in Copaxone.
The stock, however, has pared some of its intraday gains to trade 4% higher as of 11:30 a.m. on Tuesday. That compares with a 0.51% decline in the benchmark Nifty 50.
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