The stock of Aurobindo Pharma gained 2 per cent in trade on Wednesday after the company announced approval of its generic filing for antibiotic drug Cefixime by the US drug regulator, the Food and Drug Administration.

Cefixime is used to treat infection in the urinary tract, chronic bronchitis, gonorrhea and tonsillitis caused by specific organisms both in adults and children above 6 months of age.

Aurobindo will be the first generic company to market Cefixime in the US market, which is currently being sold by Lupin under the brand name Suprax. The market size for Cefixime, which includes oral suspension, tablets and chewable tablets, is estimated to be about $123 million (gross sales) according to pharma market research firm IMS. While this is positive for Aurobindo, the launch of generic Cefixime by the former is negative for Lupin.

Though Lupin has been trying to circumvent the risk from generic competition by managing the product lifecycle through launch of differentiated delivery systems such as drops, chewable tablets, the entry of Aurobindo into the suspension segment, which accounts for almost 80 per cent of Suprax’s sales, will impact Lupin’s profits.

Generic competition in Suprax, which accounted for more than 95 per cent of Lupin’s branded business in the US, will hurt the company’s profitability given the superior margins from this product. Reacting to the development, Lupin’s share price lost about 2 per cent on Wednesday.

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