RANBAXY

RANBAXY

Looks very very hot......Our target are intact 450, but it must hold 400-410 level...

Ranbaxy launches GSK's blockbuster drug in US Ranbaxy has launched the generic version of Valtrex (Valacyclovir hydrochloride) in the US under 180-day exclusivity. Though market had an apprehension that whether
Ranbaxy will be able to monetize this opportunity or not because of ongoing issue at Devas from where this molecule was filed earlier. But company is able to manage the launch by getting it manufactured at its US facility. This molecule represents its first major first-to-file (FTF) opportunity since the Daiichi acquisition and its problems with US Food and Drug Administration last year for Paonta Sahib and Dewas Facility. Ranbaxy is likely to have revenue of US$180mn (Market size is approx. US$1.3bn) and PAT of US$118mn (assuming 30% price erosion, 40% market share and 65% profit margin) during the exclusivity period. During the period, Ranbaxy will be the
only company, other than the innovator GSK, to market the product in the US.
Impact on Ranbaxy The net NPV because of this launch is Rs11/ share. The total NPV of Para IV is Rs93/share. In terms of financial implication, we believe that the impact is already been factored in the prices. However, sentimentally it is very positive for the company. Ranbaxy also has another ParaIV opportunity for the generic version of Flomax (market size-Rs1.9bn; filed from Devas) which is going to be materialize in March ’10. We believe that company will be able to monetize this opportunity also. At CMP of Rs430, the stock is trading at 43x CY09 and 24.7x CY10 consensus earnings. Though we do not have formal coverage but we believe that stock is fairly valued

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