The launch of anti-allergic cetirizine tablets in the US will give it the early mover advantage
The stock price of Wockhardt rose by 4 per cent after the company announced the launch of anti-allergic cetirizine tablets in the US market. Cetirizine, the generic for Zyrtec brand owned by Pfizer, has annual sales of $1.4 billion.
Other companies will soon get US FDA approval to launch the drug, resulting in a crash in the prices, but Wockhardt will have an early mover advantage.
Unlike other drugs going off-patent, cetirizine has another advantage. It has moved from being a prescription product to an OTC one and this would translate into better growth and margins.
The company will distribute cetirizine, besides the 56 products in its US portfolio, through Morton Grove Pharma, a US-based generic company acquired by it in October 2007. Morton Grove, with sales of $52 million largely from dermatological products, is expected to boost Wockhardt’s US sales efforts.
Wockhardt has also entered into a strategic tie-up with Leiner Health Products for distributing cetirizine to private label OTC markets.
Whereas the company has been active in the US market in the last seven years, sales from this region account for only 8 per cent of total sales for the nine-month period ended September 2007.
Analysts say the company’s product development to filing process has been slow and it has products in some highly competitive segments.
Europe accounts for 59 per cent of the company’s sales as it offers better opportunities, higher margins and is a relatively easier market to breach.
The company reported a 69 per cent jump in sales to Rs 738 crore for the quarter ended September 2007, largely on the back of its acquisition of France-based Negma Labs.
While the operating margins were up 230 basis points to 24.5 on account of lower R&D expenses, they were flat for the nine months ended September. At the current price of Rs 434, the company trades at 12 times estimated 2008 (December year end) EPS of Rs 36 and is attractively priced.
No comments:
Post a Comment