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ICICI Securities Report
Dr. Reddy's Laboratories Ltd. announced settlement of Revlimid (lenalidomide) patent litigation in U.S. with innovator Celgene (subsidiary of Bristol Myers Squibb).
As per the settlement, Celgene would provide Dr. Reddys with a license to sell generic Revlimid from a date after March 2022 (post Natco Pharma Ltd.'s launch) with a constraint of volume market share.
This license agreement would continue until January 2026, post which the company would be able to sell without any constraint.
This development provides certainty to launch and a material earnings accretion over FY23-FY26.
We estimate Dr. Reddys to generate cumulative sales and profit after tax of 2.5 billion U.S dollar and 1.6 billion U.S dollar respectively over this shared exclusivity period.
We value this opportunity at Rs 514 per share for Dr. Reddys considering annual market size of 8 billion U.S dollar and gradual market share increase to 18% in FY26.
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