Cipla Shares Rise Driven By U.S. Market Share Gains For Key Drug

Cipla Ltd. was among the top performers on the Nifty 50 after IIFL Securities said the Indian pharmaceuticals company gained market share for a key asthma drug in the U.S.

Cipla’s share in the overall Albuterol market increased to about 13% from 12.3% in the third week of January, the brokerage said in a note. Its annualised volumes trended at 7-7.2 million devices

The Mumbai-based drugmaker in April last year received the U.S. Food and Drug Administration’s approval for the copycat version of Merck Sharp & Dohme Corp.’s Proventil HFA Inhalation Aerosol, which is used to treat acute episodes of bronchospasm or prevention of asthmatic symptoms. The nod came as demand for drugs to cure breathing difficulties surged amid the coronavirus pandemic.

“While some concerns have emerged for Cipla owing to distribution rights of Proventil brand shifting to Sandoz, we note that the number of competitors in the market will not change with this realignment and hence we expect the pricing to remain largely stable,” IIFL said in the note.

While the brokerage expects some aggression from Proventil brand and expects Cipla to lose 150-200 basis points of market share, it doesn’t see that to impact Cipla’s overall earnings materially as Albuterol pricing may remain largely steady.

According to IIFL, if the entry of Sandoz helps to further expand the share of the Proventil market, Cipla will stand to benefit from the same.

IIFL has reiterated Cipla as its top pick among large-cap pharma peers and maintained its ‘buy’ recommendation.

Shares of Cipla gained as much as 3.1% in the afternoon trade to Rs 784.6 apiece.

• The stock is up for the second straight session.

• 36 of the 40 analysts tracking Cipla have a ‘buy’ rating and the other four suggest a ‘hold’, according to Bloomberg data.

• The average of 12-month consensus price target implies an upside of 26.1%.

Other highlights from IIFL’s note on subscription trends...

• Sun Pharmaceutical Industries Ltd.: Overall prescriptions in the U.S. psoriasis market have been weak in January and February. Overall prescriptions for all dry eye treatment products have declined 5-6% year-on-year in January and February.

• Biocon Ltd.: Market share in the pegfilgrastim market has remained flat over the last three months. Market share in the trastuzumab market has improved to 7.4% from 6.8% over the last three months. Semglee will see a significant market share uptick only in calendar year 2022 once it gets included in insurance formularies.

• Dr. Reddy’s Laboratories Ltd.: Generated a market share of 12-15% in Kuvan tablets, used to reduce blood phenylalanine levels, within five months of launch and a market share of 26% within seven months of launch.

Shares of Sun Pharma are also among the top performers on the Nifty 50, gaining as much as 2.3% to Rs 591.35 apiece.

• Of the 39 analysts tracking the company, 31 have a ‘buy’ rating, two say ‘hold’ and six recommend a ‘sell’.

• The average of 12-month consensus price target implies an upside of 15.3%.