Cipla announced the approval of Seroflo, the second generic version of Advair pMDI in the UK, the largest market for the product globally. We believe Seroflo is a Q1/Q2 compliant generic and through its partner, Cipla has the potential to capture 15-20% of the market share over time.
We believe the Street has largely ignored Cipla’s inherent R&D strengths, despite strengthening evidence of an improved and focused strategy. Seroflo approval, and Abraxane (filed) and ProAir filings should help revive confidence in Cipla’s R&D and signal an enhanced risk appetite. We recommend ‘buy’ .
Cipla announced the approval of the generic version of Advair pMDI in the UK under the brand name, Seroflo. UK represents the largest market for Advair pMDI globally with sales of $278 million (June’16), down from a peak of $400 million, reflecting ~25% price erosion and similar share loss to Mylan as well as GBP depreciation.
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The approval comes after over 18 months of delays to initial expectations, though given the complexity of the product we believe it will remain a 3-4 player generic market (including AirFluSal as a DPI) for the next 2to 3 years. We believe Seroflo is a Q1/Q2 compliant generic and will likely be launched as a substitutable product by Cipla’s marketing partner in coming weeks.
We expect Cipla and its partner to achieve 15-20% market share over the next four quarters, though market share gains will be more gradual, given the nature of the product. We believe adoption will be driven by local Primary Care Trust guidelines, with over 50% of prescribers adhering to it.