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The stock of drug major Cipla touched a new high of ₹575 on Tuesday, an 8 per cent gain over its previous closing price.
This followed the long-awaited approval for its combination inhaler Serroflo in two European counties – Germany and Sweden.
Serroflo is the generic version of GlaxoSmithKline’s Seretide, used to treat asthma and breathing disorders. The market size of Seretide in Germany and Sweden is expected to be around $50 million (₹300 crore).
Though these are relatively smaller markets within the EU region, Serroflo launch in these two markets raises hopes about Cipla’s approval and launch in other key markets such as the UK, France and Spain over the next few months.
The launch in these large markets will not only boost the company’s revenues but also profitability given the healthy profit margin for inhalers. The potential for Seretide in EU is around $800 million, while the market size in the UK is over $350 million.
Cipla has filed for over 10 inhaler products so far in the EU market. This includes the generic version of AstraZenca’s Symbicort brand which recorded global sales of $3.5 billion in 2013.
The EU approval of Teva Pharma’s Symbicort’s equivalent DuoResp Spiromax in April 2014 provides confidence about the approval of Cipla’s generic Symbicort. This, when happens, will provide a big leg up to Cipla’s revenues and profits in the medium term.
The company posted revenue growth of over 9 per cent in the June quarter. Due to one-off revenue from sales of Dymista (inhaler) during the same period last year, Cipla’s net profit declined over 39 per cent to ₹295 crore in the June quarter.
However, a favourable revenue mix driven by strong growth in the home market helped the company improve its operating profit margin by over 3.7 percentage points sequentially to 19.9 per cent.
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