Another generic from Dr. Reddy's
The generics drugmaker plans to tackle AstraZeneca's blockbuster antipsychotic drug Seroquel next.
Late last month, the U.S. Food and Drug Administration had approved Dr. Reddy's abbreviated new drug application for the generic drug. Seroquel is approved for the treatment of schizophrenia and bipolar mania.
According to IMS Health, U.S. sales of the Seroquel brand amounted to about $4.6 billion for the 12 months ended December 31, 2011.
Last month, Dr. Reddy's launched its generic version of Pfizer Inc.'s (PFE) antipsychotic drug, Geodon (ziprasidone) in the U.S. The drug is approved for the treatment of schizophrenia and bipolar disorder.
We expect generic launches at regular intervals to add to Dr. Reddy's Global Generic revenues, which soared 57% year-over-year to $402 million in the third quarter of fiscal 2012.
During the reported quarter, generics' revenues climbed 133% in North America, 15% in Russia and other CIS (Commonwealth of Independent States) markets, 14% in Europe and 11% in India. Growth was mainly driven by the launch of a generic version of Eli Lilly & Co.'s (LLY) Zyprexa (olanzapine) 20 mg.
We currently have a "neutral" recommendation on Dr. Reddy's. The stock carries a Zacks #2 Rank ("buy" rating) in the short-run. We believe Dr. Reddy's is in a strong position to benefit from the huge potential presented by the U.S. generics market, as quite a few blockbuster drugs such as Johnson & Johnson's (JNJ) Concerta and Pfizer's Lipitor have lost patent exclusivity, and more drugs are slated to go off-patent in the coming years.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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