Shares of Ranbaxy Laboratories Ltd, which on Wednesday said it has settled most of its patent litigations on Pfizer Inc’s blockbuster drug Lipitor, fell 7.68% on Thursday on the Bombay Stock Exchange (BSE), after the settlement was seen as offering no near-term benefit for the Indian company. Ranbaxy shares opened at Rs 612.75 on the BSE, touched a high of Rs 613.70, its highest in a year, before closing at Rs 552.25, which was Rs 45.95 lower than the previous close of Rs 598.20.
Meanwhile, shares of Pfizer Inc gained more than 5% on the New York Stock Exchange earlier in the session on Wednesday, peaking at $18.54 on heavy volume. In afternoon trading, shares were up 13 cents to $17.85. It later closed at $17.77.
Brokerages said the settlement also lowered the chances of the US drugmaker making a counter bid for Ranbaxy, India’s largest pharma company. Last week, Ranbaxy sold 34.8% promoters’ stake to Japan’s Daiichi Sankyo in a deal worth up to $4.6 billion.
On Wednesday, Pfizer had said Ranbaxy could start selling a US generic form of its cholesterol drug Lipitor by late 2011, months later than Wall Street expectations.
“Lipitor deal (is) a dampener,” CLSA analysts said in a note. “We believe that Ranbaxy’s settlement of Lipitor gives Pfizer a lot in terms of profits as it delays the generic entry by 20 months, yet denies Ranbaxy any incremental benefit.”
Agencies quoted Deutsche Bank North America analyst Barbara Ryan, who expected Lipitor generics to hit the market in March 2010, saying the extra 20 months of exclusivity will add $5 billion to Pfizer’s revenue in both 2010 and 2011.
Ranbaxy’s founding Singh family agreed to sell their stake to Daiichi Sankyo, Japan’s No. 3 drugmaker, which would also buy up to 20% more from other shareholders.
The patent settlement also diminished the prospect for a counter bid, analysts at Credit Suisse said. “This deal should also end all speculation over Pfizer making a potential bid for Ranbaxy; we always thought it was unlikely, but there were some in the market who thought it was likely,” the brokerage said in a note.
