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Shares of Dr Reddy's Laboratories plunged as Indivior has won a preliminary injunction against the company. The stock nosedived as much as 10.8 per cent to a five-week low of Rs 2,069.95.
A US court has granted Indivior a preliminary injunction blocking Dr Reddy’s Laboratories from selling cut-price versions of the British drugmaker’s best-selling opioid addiction treatment in the United States.
The ruling comes days after Indivior scrapped its full-year guidance citing an “accelerated” loss in US market share to the cheaper version of star drug Suboxone launched by the Indian firm. Dr Reddy's and the US-based Mylan NV had received USFDA's nod last month to sell versions of Indivior's opioid addiction treatment Suboxone Film.
The injunction would adversely impact Dr Reddy's as the company would have to await an appeals court's decision. By that time, more competitors could gain approval, says Nomura. It has retained “buy” rating and a price target of Rs 2,704.
Jefferies analysts say that the injunction is a negative surprise for Dr Reddy's and the risks for FY20-22 EPS estimates have increased after the ruling. The brokerage has retained “underperform” rating, and it has cut the price target to Rs 1,850 from Rs 1,910.
The brokerage adds that the injunction also raises concerns on the company winning '305 patent case’ which will impact FY20/21 EPS for which Suboxone contributes more than Rs 20, in its estimates. Dr Reddy’s stock had fallen 3.9 per cent this year as of last close.
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