Lupin Pharmaceuticals (LPC) had a double whammy as news of a form 483 at its key Goa facility led to fears about negative FDA action, though we are yet to see the 483. At the same time, Valeant reported $86 million revenues for Glumetza in 4QCY16, far lower than consensus estimates of $100-150 million market size, and reflecting our views of 70% rebating. We now see a possibility of 10% downgrade to FY17 consensus EPS on back of lower Glumetza sales. Reduce.
In an inspection carried out last week, LPC’s Goa facility received a 483 with 9 observations. The inspection follows a July 2015 inspection when LPC was handed 9 observations. The Goa facility is LPC’s flagship facility with key products, making several key products such as Fortamet ER, Lisinopril, Glumetza, etc and on our estimates, will account for 40-50% of LPC’s US sales in FY16.
Worries are amplified due to high reliance on Goa for several of LPC’s key ANDA filings (esomeprazole, sevelamer, etc.). The 8-month time gap between two inspections has left investors baffled, and we believe the recent inspection might have been a prior approval inspection for an ANDA, though we note that this is the third instance observed by us when a company has been re-inspected in less than 12 months.