Institutional Equities

Transcription

1 Sector Update Pharmaceutical Sector 1 October 218 Prescription Charts of Interest September 218 Dr. Reddy s Laboratories During the quarter, the company gained strength in Aloxi while it continues to maintain prescription share in Toprol XL despite incremental competition from Cadila Healthcare and Novast Laboratories. The company s market share in Aloxi is 26% as against exit market share of 2.% in the previous quarter. Sernivo prescription volume is on a downtrend, while that of Zembrace Symtouch is on a rising trend. Recent approval for Gleevec generic should help the company to garner around US$4mn in incremental sales (annual), assuming a 1% market share. Cipla The company is ramping up its presence in Pulmicort with a 2bps improvement in market share QoQ. Prescription volume in Pulmicort is up 2% QoQ. The company has also incrementally launched recently an anti-cancer drug Exemestane (Aromasin generic) which was approved in early 1QFY19. Cipla has ramped up % market share in an US$7mn market. Cipla is yet to build share in testosterone cypionate and gvoltaren gel. Aurobindo Pharma Ramp-up in Ertapenem (Invanz generic) is encouraging and the company has achieved 16% market share, which translates to US$4mn in annual sales. The market share ramp-up is steady and progressing. In addition, the company continues to hold on to its market share in Renvela generic suspension and Renvela generic tablets. Lupin The company s market share in Methergine is now down to 7%. Granules India and Hikma market shares are at 3%. During the quarter, Granules India added 7bps in market share. Methergine is an US$7mn opportunity. Lupin continues to build prescription volume in its recent brand launch Solosec - meant for bacterial vaginosis. Weekly prescription volume stands at 7, which should translate to annual sales of US$mn-US$6mn. The prescription volume should ramp up further. We expect Solosec sales to peak around US$4-US$mn. Natco Pharma NatcoPharma/Mylan market share in Copaxone 4mg generic remains stable around 2%, while Sandoz - a new entrant - is gradually building market share which is currently around 2.%. Sandoz gains market share from Teva. Biocon Biocon/Mylan launched biosimilar Neulasta under the Fulphila brand during the quarter. Market share gain is yet to reflect in the prescription numbers. We believe the reimbursement-related formalities, which are in place now, should allow prescription ramp-up from the coming quarter. Biocon competes with the innovator in the vial segment of Neulasta market (US$1.3bn in annual sales). Assuming a 1% market share in the first full year, Biocon and Mylan may touch US$1mn in sales. Coherus Bioscience may also launch a competing copy of biosimilar Neulasta in November 218. Sun Pharmaceutical Industries (SPIL) Yonsa, which competes with Zytiga, is gaining prescription volume but it is negligible as of now. Despite an encouraging formulary status, the prescription volume is low as existing patients on Zytiga are not being switched, but only new patients are being considered for Yonsa as an alternative. Cequa - SPIL recently received the US Food and Drug Administration or USFDA approval for Cequa (dry eye treatment drug) in the US. The dry eye prescription market which has just two players - Restasis and Xiidra - continue to gain prescription volume. Xiidra, a new entrant, is gradually gaining market share, but largely from new patients as Restasis prescription volume is stable. We expect Cequa to perform on similar lines as Xiidra because the dry eye drug market has a large patient pool that is awaiting a new treatment option. Odomzo Market prescription volume is flattish QoQ and there was no incremental market share gain in basal cell carcinoma market. Vishal Manchanda Research Analyst vishal.manchanda@nirmalbang.com Madhurima Kane Research Associate madhurima.kane@nirmalbang.com

2 Aloxi: On QoQ basis, Dr. Reddy s Laboratories or DRL has witnessed a major ramp-up in Aloxi prescription volume. DRL s market share is up from 2.% at the end of 1QFY19 to 26% as of mid-september 218. Exhibit 1: Aloxi prescription trend (market share) Abiraterone Acetate: Yonsa market share gains so far are limited as existing patients treated with Zytiga are not likely to be switched to Yonsa in the absence of evidence about the treatment effect on account of switching. Around 9, patients initiate treatment with Zytiga annually. For Yonsa to achieve US$1mn in sales, it needs to be initiated on 6 patients ever year. The duration of the treatment is approximately 24 months. Exhibit 2: Abiraterone Acetate prescription trend (nos.) 4, 3, 3, 2, 2, 1, 1, Eisai Dr. Reddy Intas Cipla Teva Novartis Johnson - Zytiga Sun Pharma - Yonsa Copaxone (4mg): Mylan/Natco Pharma market share remains flat around 2%, while Sandoz is gradually gaining market share which is currently around 2%, largely acquired from Teva's pie. 2 Pharmaceutical Sector

3 Exhibit 3: Copaxone (4mg) prescription trend (market share) Teva Mylan Novartis Dry eye drug market: Market share for Xiidra and Restasis seems to have stabilised around 7% and %, respectively. Xiidra has gained market share entirely from new patients as the Restasis prescription volume remains intact. The dry eye drug market remains under-penetrated as the limited efficacy of existing treatment options restricts wider adoption. We expect the introduction of Sun Pharma Cequa to further expand the market as we see the same to be a more potent option for dry eye treatment compared to Restasis. Cequa will expand the treatment armamentarium for the physician. Exhibit 4: Prescription trend (market share) for dry eye drug market Restasis - Allergan Xiidra - Shire Others Ertapenem: Aurobindo Pharma (APL) is showing good ramp-up in Ertapenem. It has a 16% market share currently. Ertapenem is an US$36mn product in terms of annual sales. At 16% market share and assuming 3% price discount, APL can generate US$4mn in sales annually. APL share should ramp up further as just a couple of months has passed since the launch. 3 Pharmaceutical Sector

4 Exhibit : Ertapenem prescription trend (market share) Exemestane: Cipla received approval for Exemestane in May 218, while the launch happened during the current quarter. Cipla has ramped up % market share, which should translate to US$3mn in annual sales. Exemestane market is valued at US$7mn annually. Exhibit 6: Exemestane prescription trend (market share) Merck Endo Aurobindo Hikma Pfizer Alvogen Upsher Smith Cipla Mylan Gleevec: Market share in Glivec is stable. SPIL retains around 13% market share. Mylan, a recent entrant, has achieved a low single-digit share. DRL, which received the approval recently, is still to launch the drug. Generic drug prices are almost 8% below branded drug prices. At the generic price, the market is valued at around US$4mn. Assuming 1% market share for DRL, it can garner around US$4mn annually. Natco Pharma is also expecting an approval shortly, which will potentially shrink the market further. 4 Pharmaceutical Sector

5 Exhibit 7: Gleevec prescription trend (market share) Apotex Teva Novartis Others Methergine: Granules India/Hikma achieved a market share of 3% as against exit market share of 23% in the previous quarter. Exhibit 8: Methergine prescription trend (market share) Lupin Hikma Others Odomzo/Erivedge: Odomzo market share remains flat around 9%, while Erivedge dominates with a 91% market share. Exhibit 9: Erivedge prescription trend (nos.) 29 Erivedge Exhibit 1:Odomzo prescription trend (nos.) 4 Odomzo Hoffman La Roche Sun Pharma Pharmaceutical Sector

6 Pegfligrastim: Mylan launched a biosimilar Neulasta under the brand Fulphila about a quarter ago. Currently, Fulphila is yet to make its mark as the reimbursement process is a taking a longer time. We expect the ramp-up to be evident from 3QFY19 onwards. Fulphila will initially target about 37% of the Neulasta market which is yet to be converted to its novel delivery device (onpro kit). Hence, we see the target market as US$1.3bn. While the discount for biosimilar deepens, there is a chance that the onpro kit should start giving up to biosimilar players. Exhibit 11: Pegfligrastim prescription trend (nos.) Neulasta - Amgen Fulphila - Mylan Pulmicort: Cipla continues to ramp up Pulmicort. Prescription volume is up 2% QoQ. Cipla s market share is now around 13.% as against exit share of 1% in the previous quarter. Exhibit 12: Pulmicort prescription trend (market share) Teva Astrazeneca Cipla Impax Novartis Others Renvela suspension: Aurobindo Pharma maintains its market share in Renvela suspension generic at around %, which translates to around US$mn to US$4mn in annual sales. 6 Pharmaceutical Sector

7 Exhibit 13: Renvela suspension (market share) Aurobindo Sanofi Renvela tablets: Aurobindo Pharma retains its lead market position with a 37% market share. DRL seems to have lost some ground during the quarter as its market share currently is around.% as against 7.% in the previous quarter. Exhibit 14: Renvela tablets (market share) Aurobindo Sanofi Cipla Amneal Others Solosec: Prescription volume of this drug is gradually ramping up. At the current weekly run-rate, the market potential aggregates to US$mn-US$6mn annually. Solosec, which is meant for the treatment of bacterial vaginosis, is different from Standard of Care or SoC (Metronidazole) as it offers dosing convenience (single dose), while the SoC needs to be taken once daily for seven days. In addition, patients taking Solosec need not abstain from alcohol, which is required in case of SoC. Tinidazole, which also offers dosing convenience (two-day course), generates almost six times more prescription volume and is available at 1/1th of Solosec s cost. Tinidazole requires abstinence from alcohol. 7 Pharmaceutical Sector

8 Exhibit : Solosec prescription trend (no. of prescriptions) 9 Solosec Lupin Sernivo: Sernivo prescription volume trend remains subdued. Prescription volume is down 1% QoQ. Exhibit 16: Sernivo prescription trend (no. of prescriptions) 29 Sernivo Perrigo Toprol XL: DRL maintains market share in Toprol XL. Zydus Cadila, which got the approval earlier this year, launched the drug recently. Zydus Cadila s market share is currently in low single-digit. Ingrez/Novast, which also received approval around the same time as Zydus Cadila, took 6% market share. The gains for new players have largely come from Teva Pharma and the authorised generic player. 8 Pharmaceutical Sector

9 Exhibit 17: Toprol XL prescription trend (market share) Teva Dr. Reddy Lannett Ingenus Valsartan: Valsartan prescription volume declined 7% as major suppliers had to exit the market because of reported concerns over cancer-causing impurities in the product. Currently, Alembic Pharma, Jubilant Lifesciences and Aurobindo Pharma are the primary suppliers. We understand that there is a major price hike in Valsartan because of limited supply of its key starting material. Exhibit 18: Valsartan prescription trend (market share) Aurobindo Jubilant Life Mylan Alembic Novartis Macleods Zhejiang Huahai Others Vytorin: DRL maintains its market share in Vytorin at 3%. Amneal, a recent entrant, is yet to gain market share. 9 Pharmaceutical Sector

10 Exhibit 19: Vytorin prescription trend (market share) Impax Dr Reddys Teva The pharma network Others Welchol: The innovator still continues to hold most of the market share in Welchol, followed by the authorised generic maker (SPIL) which has a 27% share. Glenmark Pharma struggles to gain market share as it lags with 8.% share. On QoQ basis, Glenmark Pharma s market share has significantly improved from 1.7% to 8.%. Exhibit 2: Welchol prescription trend (market share) Daiichi Sankyo Sun Pharma Impax Glenmark Zembrace Symtouch: Prescription volume of this drug is growing steadily. On QoQ basis, prescription volume is up 3.7%. DRL s cumulative share in Sumatriptan injection market stands at 4%. SPIL s market share stands at 22%. 1 Pharmaceutical Sector

11 Exhibit 21: Zembrace Symtouch prescription trend (nos.) 8 Zembrace Symtouch Promius 11 Pharmaceutical Sector

12 DISCLOSURES This Report is published by Nirmal Bang Equities Private Limited (hereinafter referred to as NBEPL ) for private circulation. NBEPL is a registered Research Analyst under SEBI (Research Analyst) Regulations, 214 having Registration no. INH1436. NBEPL is also a registered Stock Broker with National Stock Exchange of India Limited and BSE Limited in cash and derivatives segments. NBEPL has other business divisions with independent research teams separated by Chinese walls, and therefore may, at times, have different or contrary views on stocks and markets. NBEPL or its associates have not been debarred / suspended by SEBI or any other regulatory authority for accessing / dealing in securities Market. NBEPL, its associates or analyst or his relatives do not hold any financial interest in the subject company. NBEPL or its associates or Analyst do not have any conflict or material conflict of interest at the time of publication of the research report with the subject company. NBEPL or its associates or Analyst or his relatives do not hold beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of this research report. NBEPL or its associates / analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. NBEPL or its associates have not received any compensation or other benefits from the company covered by Analyst or third party in connection with the research report. Analyst has not served as an officer, director or employee of Subject Company and NBEPL / analyst has not been engaged in market making activity of the subject company. Analyst Certification: I/We, Vishal Manchanda the research analyst and Madhurima Kane the research associate are the authors of this report, hereby certify that the views expressed in this research report accurately reflects my/our personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research report and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. 12 Pharmaceutical Sector

13 Disclaimer Stock Ratings Absolute Returns BUY > % ACCUMULATE -% to% SELL < -% This report is published by Nirmal Bang s Research desk. Nirmal Bang group has other business units with independent research teams separated by Chinese walls, and therefore may, at times, have different or contrary views on stocks and markets. Reports based on technical and derivative analysis may not match with reports based on a company's fundamental analysis. This report is for the personal information of the authorised recipient and is not for public distribution. This should not be reproduced or redistributed to any other person or in any form. This report is for the general information for the clients of Nirmal Bang Equities Pvt. Ltd., a division of Nirmal Bang, and should not be construed as an offer or solicitation of an offer to buy/sell any securities. We have exercised due diligence in checking the correctness and authenticity of the information contained herein, so far as it relates to current and historical information, but do not guarantee its accuracy or completeness. The opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. Nirmal Bang or any persons connected with it do not accept any liability arising from the use of this document or the information contained therein. The recipients of this material should rely on their own judgment and take their own professional advice before acting on this information. Nirmal Bang or any of its connected persons including its directors or subsidiaries or associates or employees or agents shall not be in any way responsible for any loss or damage that may arise to any person/s from any inadvertent error in the information contained, views and opinions expressed in this publication. Nirmal Bang Equities Private Limited (hereinafter referred to as NBEPL ) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited. NBEPL has registered with SEBI as a Research Entity in terms of SEBI (Research Analyst) Regulations, 214. (Registration No: INH to ). NBEPL or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. NBEPL or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. NBEPL /analyst has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market-making activity of the company covered by Analyst. The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision. Access all our reports on Bloomberg, Thomson Reuters and Factset. Team Details: Name Id Direct Line Rahul Arora CEO rahul.arora@nirmalbang.com - Girish Pai Head of Research girish.pai@nirmalbang.com / 18 Dealing Ravi Jagtiani Dealing Desk ravi.jagtiani@nirmalbang.com , Pradeep Kasat Dealing Desk pradeep.kasat@nirmalbang.com /811, Michael Pillai Dealing Desk michael.pillai@nirmalbang.com /813, Nirmal Bang Equities Pvt. Ltd. Correspondence Address B-2, 31/32, Marathon Innova, Nr. Peninsula Corporate Park, Lower Parel (W), Mumbai-413. Board No. : /1; Fax. : Pharmaceutical Sector