Sun Pharmaceuticals: Nomura says generic to cap upside

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Published: December 4, 2017 12:35:22 AM

TRx data shows trends for key products; Cadila and Natco see good response to gTamiflu; gains for some of Glenmark launches limited

Sun Pharmaceuticals, normura, generic, Cadila,Alvogen Apotex launched an authorised generic and has captured 13% market share. We believe launch of an authorised generic will materially limit the upside for Sun Pharma.

We looked at the weekly IMS TRx data for the week ending 17 November, 2017. The key market share trends of some of the key products are as follows:  Sun Pharma (Neutral) received approval and launched gCoreg CR in November, 2017. In the second week of launch, it has gained 10% market share. Apotex launched an authorised generic and has captured 13% market share. We believe launch of an authorised generic will materially limit the upside for Sun Pharma. We have factored in $35 mn in revenues from gCoreg CR in FY19F and don’t expect any upside to our estimates.

Both Cadila (Neutral) and Natco (not rated) launched gTamiflu suspension in the US market. Alvogen and Cadila got 28% and 18% market share, respectively, for the week ending 17 November. Tamiflu is a seasonal product and hence the incumbents can benefit in the near term if the season is strong and competition remains limited. It is early days of the flu season, but we observe that the trailing 4-week TRx this year is 2.8x of the same period last year. The month of November accounts for just 3-10% of the year’s TRx and, hence, we can’t conclude on the strength of the flu season decisively. We have factored in $32 mn from the product in FY18F for Cadila in our estimates. An upside risk to our estimates can’t be ruled out for FY18F. However, the upside is unlikely to be repeated next year as, if not this year, then by next year we surely expect competition to intensify.

In gRenvela tabs, competition has intensified with Impax, Cipla (Buy) and an authorised launching product in recent past. The market share for Impax and Cipla is very low.  In gNitrostat, DRRD (Buy) faces additional competition from Glenmark. DRRD’s market share is unchanged at 58%, whereas Glenmark’s share is less than 1%.

The market share gains for Glenmark (Buy) for some of the new launches are limited. In gNitrostat, the market share gain is less than 1% and in gEmend, just at 1.2%. The share gains so far are lower than our expectations. However, we see Glenmark gaining share in some of the earlier derma launches. Management has guided for more than $125 mn in revenues in 3QFY18F vs. $113 mn in 2QFY18.

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