The Hindu Business Line : Dr Reddy’s Labs gets USFDA nod for Omeprazole Mg

Dr Reddy’s Laboratories has received the US Food Drug Administration approval to sell Omeprazole Mg drug, which is the generic version of AstraZeneca plc’s (AZN) Prilosec and is used for the treatment of stomach ulcers and heartburn. While the announcement was expected, what appears to have pleasantly surprised the street is the earlier-than-expected approval from the US regulator. Earlier in the year, Dr Reddy’s had won the legal case against AZN that its product did not infringe the patent.

Earnings upside

This ANDA approval marks a significant earnings trigger for the company considering that the branded Prilosec had annual sales of approximately $362 million in the US, based on IRI sales data of July 13, 2008. But apart from the innovator sales, the market also features another generic player Perrigo, which vends the drug in tablet form. This may not pose much of a problem as Dr Reddy’s generic drug will be in capsule form, similar to that of the innovator.

Besides no other company is currently litigating with AZN and the formulation patents expire only in 2014. This leaves Dr Reddy’s with sufficient time to capitalise on this potential business opportunity. Earnings from this launch are likely to trickle in from the second quarter of the current year as the company is expected to make its first shipment in June.

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