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 signal an enhanced risk appetite. Buy.
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. Advair’s high contribution to UK drug budget (over 10%) should drive continued share gain over time.
Apart from Seroflo, Cipla recently received several approvals in the US, including for complex injectables such as melphalan (through Par), and orals such as Wellbutrin XL and Tricor (Invagen). We expect the launch momentum to continue over FY2018-19 including several interesting products such as Toprol XL, Renvela, Renagel, Nasonex, Dacogen, Vidaza, Lotronex as well as the initial range of ARVs.
Filing/ acceptance of ProAir HFA ANDA and initiation of clinical endpoint trial for Advair DPI for the US in 2HFY18 should revive faith in Cipla’s R&D capabilities and its enhanced risk taking appetite.