Shares of Dr. Reddy's Laboratories fell by 10.77% to a five-week low of Rs 2,069.95 per share on the National Stock Exchange in early trade on Monday.
Shares of Dr.Reddy’s Laboratories tumbled nearly 11% in early trade on Monday after a US Court blocked the drugmaker from selling its generic version of Suboxone, which is used for the treatment of opioid dependence. Shares of the pharmaceutical company fell by 10.77% to a five-week low of Rs 2,069.95 per share on the National Stock Exchange in early trade on Monday. Dr.Reddy’s Laboratories shares slipped by 9.48% to a low of Rs 2097.70.
Suboxone’s innovator Indivior PLC on July 13 announced that the US District Court for the District of New Jersey has granted a preliminary injunction (PI) against Dr. Reddy’s Laboratories. “The restrictions of the previously entered temporary restraining order (TRO) remain in place, and DRL is unable to sell, offer to sell, or import its generic buprenorphine/naloxone sublingual film product, pending the outcome of recently filed litigation against DRL related to U.S. Patent No. 9,931,305 (the ‘305 patent), or a decision of the U.S. Court of Appeals for the Federal Circuit dissolving the injunction,” Indivior said in a statement.
The statement added that the Court has also ordered the parties to submit a final proposed injunction order on Monday, July 16. In response to the preliminary injunction order, Dr.Reddy’s Laboratories on Saturday announced its intent to appeal the US court’s decision with respect to further sales and commercialization of its generic Suboxone Sublingual Film within the US. “The company disagrees with the court’s decision, and will vigorously appeal it,” the company said in a regulatory filing to the BSE on July 14.
Dr.Reddy’s had announced the receipt of the approval, on June 15, 2018, by one of its wholly-owned subsidiaries, from the U.S. Food and Drug Administration (USFDA) for its Buprenorphine and Naloxone Sublingual Film, 2 mg/0.5 mg, 4 mg/1 mg, 8 mg/2 mg, and 12 mg/3 mg, therapeutic equivalent generic version of Suboxone (buprenorphine and naloxone) sublingual film, in the US market, the regulatory filing said.
What global brokerages say:
Nomura: Injunction would adversely impact Dr.Reddy’s as co would have to await an Appeals Court’s decision, said a Reuter’s report quoting Nomura. By that time, more competitors could gain approval, says Nomura and retains “buy” rating and target price of Rs 2,704, reported Reuters.
Jefferies: According to a Reuters report, Jefferies analysts said that injunction is a negative surprise for Dr.Reddy’s and risks for FY20-22 EPS estimates have increased after the ruling. Jefferies has retained “underperform”, cuts target price to Rs 1,850 from Rs 1,910, reported Reuters.