Divi's Lab Clarifies After US Court Paves Way For Novartis' Heart Drug Generic; Share Price Down
The US court's decision had an adverse impact of Divi's Labs' stock as the Indian company has a CDMO pact with Novartis for the heart drug Entresto.
Divi's Laboratories' shares were trading over 3% lower on Thursday, in the aftermath of a US appeals court dismissing Novartis AG's bid to block the launch of a generic version of its best-selling heart drug Entresto.
The ruling had an impact on Divi's Labs stock as the Indian company has a contract manufacturing organisation pact with Novartis for Entresto.
The generic drug, which is to be launched by MSN Pharmaceuticals, received nod from the US Food and Drug Administration in July. Its launch is expected to adversely affect the market share of Entresto, which is Novartis' best-selling drug and drew the company over $6 billion in revenue last year.
Divi's Labs, after facing a drubbing at the stock market in the day's trade so far, issued a clarification to the exchanges. The drugmaker claimed that it sees "no material impact".
"We hereby clarify that we can not comment on the patent lawsuits of big pharma companies and its impact on them. As a Contract Manufacturing Organization (CDMO) and manufacturer of Active Pharmaceutical Ingredients (APIs), in the normal course of our business, we have supply agreements with some of our customers," the regulatory filing stated.
"There is no material impact of this news article on our company," it added, referring to the news of Novartis losing its appeal before a US court.
Notably, the Switzerland-based Novartis had approached a district court in the United States' Delaware in August, claiming that MSN's plan to launch a generic of Entresto violates the a patent that expires in 2026.
After the Delaware court ruled against its plea, Novartis filed a petition before the US Court of Appeals for the Federal Circuit. The appeals court upheld the Delaware judge's ruling in an order issued on Wednesday, news agency Reuters reported.
Novartis, in a statement, said it is considering all "available options to vigorously defend our intellectual property rights, including further appellate options."
Divi's Labs shares were hit in the aftermath of the US appeals court ruling against Novartis' petition.
Share price of Divi's Labs stood at Rs 6,052.2 apiece on the National Stock Exchange at 1:48 p.m., down 3.27% as against the previous day's close. In comparison, the benchmark Nifty 50 was up 0.72%.
Over the past 12 months, the stock has risen by 61.88%, whereas the year-to-date surge has been of 61.88%.
Among the 28 analysts tracking the stock, 10 have a 'buy' rating, five suggest a 'hold', and 13 recommend a 'sell', according to Bloomberg data. The average of 12-month analysts' price target implies a potential downside of 9.9%.
