Dr. Reddy's Laboratories Ltd.
) recently announced that it has launched its generic version of
Merck & Co., Inc.'s
) Propecia (finasteride) 1 mg. The company will enjoy 180-days of
marketing exclusivity in the US.
Propecia is approved for the treatment of male pattern hair
loss. According to IMS Health, Propecia generated US revenues of
approximately $136 million for the 12 months ending October 31,
At the end of the last quarter, Dr. Reddy's had 63 ANDAs
pending approval with the FDA, of which 33 are Para IV filings
and 7 are first-to-file.
Dr. Reddy's Global Generics segment revenues jumped 25% to
$380 million in the last quarter. Generics revenue soared in
North America (up 47%), driven by limited competition.
Revenues were also boosted by products from Shreveport
facility and the ramp-up in the antibiotics portfolio. Generics
revenues also increased in Russia and other CIS (Commonwealth of
Independent States) markets (up 14%), India (up 12%) and the rest
of the world/RoW (up 50%). However, generic revenues declined 16%
in Europe due to disappointing performance in Germany.
We are pleased with Dr. Reddy's geographic reach and product
depth. Dr. Reddy's also has a robust generic product pipeline.
However, the company's performance in Europe due to the continued
economic weakness remains a concern.
During the period of 2017-2018, most of the large branded
drugs are due to lose patent exclusivity and so we have little
visibility on the growth prospects of generic companies like Dr.
Reddy's beyond that timeframe.
In view of these challenges, we see limited upside from
current levels and maintain a Neutral recommendation on Dr.
Reddy's. The stock carries a Zacks #3 Rank (Hold) in the short
), another generic player, currently holds a Zacks #2 Rank
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