Great work Sourav, I like how you presented your thoughts and your ball park estimate in an easy to follow method.
My estimates for Biocon’s incremental revenue world wide (not just US) is between $1.2 - $1.5B as compared to your conservative estimate of $1Bn just in the US. Again this is pie in the sky stuff, no one really knows how things are going to play out, legal delays if any etc. So your guess is as good as mine or any other’s for that matter. There are too many unknowns (regulatory, IP) & Mylan Biocon license agreement (which is confidential - the usual precedent varies from a 40-60 to a 50-50 ) so estimating numbers with any degree of certainty is going to be hard.
That being said, the larger point is that whatever be the end outcome, (your estimates of $1Bn in sales, mine or those of Morgan Stanely ) The 2 key points are
a. The potential of the pipeline is orbit changing,
b. As seconded by Morgan Stan in their recent report, the ,market is totally ignoring the pipeline, and will one day value it appropriately. I interpret that as a favorable risk reward. If it wokrs out and gets approvals, great! If not, dont see too much downside as the market is not pricing the pipeline to begin with. The MS report presented a wonderful comparative study of Biocon with Celltrion of Korea. Same story there, market ignored pipeline all the way till FDA filling (not approval) eventually got a few of their ANDAs approved, stock up from a $1Bn Mcap to $10Bn in 3 years. I wish I could share the MS report, its around 8MB (32 pages) the max limit of sharing a file here is much smaller.
Thanks for your views Saurav.
Disc: I have taken a position in this counter.