Dr. Reddy’s Laboratories (RDY - Analyst Report) recently announced the US launch of its generic version of AstraZeneca’s (AZN - Analyst Report) drug, Seroquel. Late last month, the US Food and Drug Administration (FDA) had approved Dr. Reddy’s abbreviated new drug application (ANDA) for the generic drug. Seroquel is approved for the treatment of schizophrenia and bipolar mania.
According to IMS Health, US 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 - Analyst Report) antipsychotic drug, Geodon (ziprasidone) in the US. 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 - Analyst Report) 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 US generics market, as quite a few blockbuster drugs such as Johnson & Johnson’s (JNJ - Analyst Report) Concerta and Pfizer’s Lipitor have lost patent exclusivity and more drugs are slated to go off-patent in the coming years.