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The stock has gained more than 16% in last two trading sessions (touching all time high of Rs 96.70 on Wednesday), after Alembics received approval for NDA (New Drug application) for Desvenlafaxine ER.
The drug used for treatment of Depression is bio-equivalent version of Pristiq by Pfizer. While the current market size for Pristiq is approximately US$538 mn, based on industry sales data, Alembic will have to carve out its share from the market.
Alembic has tied with Ranbaxy, which will use its field force and distribution channel to market the drug in the US.
The drug available in two dosage forms 50 and 100 mg will be sold on a cost plus basis to Ranbaxy who will incur the marketing costs for the same. Both the companies will share the profits after incurring the production and marketing costs-
Rahul Sharma at Karvy stock broking factors in $38 million revenues for FY14E based on 30% price erosion and a 10% market share for this product. The scale up in the product is likely to be slower as this will require promoting the product through detailing. Product is based on a slightly different salt. However Desvenlafaxine ER will have 30 month exclusivity before the original product faces competition in 2015.
Alembic that is growing at a good pace of 12-14% in the domestic market is attempting to have a strong pipeline and grow exponentially in the US. It has strong product pipeline of 55 ANDAs with 21 approvals and 15 launches including exclusive opportunities of five Para IV and one 505 B (2). The Products as Desvenlafaxine ER fall in the category of 505 B (2).
Moving forward the company expects to file 10-12 more products every year including two 505 (b) (2) in FY14 with 7-8 approvals in FY14. It expects its international business to grow at CAGR of 30-35% over next 2-3 years adds Rhunjun Jain at Nirmal Bang.
Thus the prospects for Alembic are getting stronger. While Jain advices the investors to accumulate the stock on declines to a target price of Rs 119, Sharma recommends a target price of Rs 110 for the stock.
