Lupin LUPN.NS LPC IN EQUITY: HEALTH CARE & PHARMACEUTICALS Good approvals- Monodox and Cipro OS Global Markets Research 6 March 2014 Quick Note Target price Lupin gains FDA approval for generic Monodox and Cipro OS Closing price Limited competition and supply constraints make Monodox an interesting opportunity for Lupin Research analysts
Monodox approval is a surprise and is not explicitly modelled in our
estimates. Monodox caps (generic: Doxycycline Monohydrate) has annual
Saion Mukherjee - NFASL
sales of USD 180m in the US with limited competition. Monodox is available
in three strengths: 50mg, 75mg and 100mg. The brand Monodox has more
than 70% market share, given generic supply constraints.
Lalit Kumar - NFASL
The 75mg strength is the most interesting opportunity, in our view. The
strength accounts for USD 90m in sales with only Ranbaxy and the innovator
Aqua Pharm. In terms of sales Acqua Pharm has 73% market share.
In 50mg and 100mg, the competition is relatively high with generics
approvals for Ranbaxy, Par and Actavis. Both strengths combined represent USD 90m in sales. However, there are supply constraints with the generics and most of the market share is currently with the innovator. Acqua Pharm has ~78% market share in sales term as per IMS.
Given the limited competition, LPC could record ~USD 20m in revenues from the product in FY15, in our view.
Exclusivity in Cipro OS
Cipro OS (Generic: Ciprofloxacin Oral suspension) has annual sales of USD 8.6m. The opportunity size is much smaller. Lupin is the first filer and is likely to remain the only player for a considerable period. We think the product is likely to have sales of less than USD 5m, but at a higher margin.
We believe Lupin’s US pipeline has the potential to surprise on the upside. On our EPS estimates, the stock currently trades at 20.5x FY15E and 18.1xFY16. Retain Buy.
See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts.
Appendix A-1 Analyst Certification
We, Saion Mukherjee and Lalit Kumar, hereby certify (1) that the views expressed in this Research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this Research report, (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Research report and (3) no part of our compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or any other Nomura Group company.
Issuer Specific Regulatory Disclosures The term "Nomura Group" used herein refers to Nomura Holdings, Inc. or any of its affiliates or subsidiaries, and may refer to one or more Nomura Group companies. Materially mentioned issuers Price date Stock ratingSector ratingDisclosures Lupin (LPC IN) INR 983 (06-Mar-2014) Buy (Sector rating: N/A)
Rating and target price chart (three year history)
Rating Target price Closing price
For explanation of ratings refer to the stock rating keys located after chart(s)
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