Excellent summary Ranvir - I also listened to the concall…
Lenalidomide is the next biggest trigger for Natco for sure. Approval expected before December 2020. Sales should start from Q4 2022 (March 2022 launch as per the agreement with celgene) - stocking for March 2022 will start from Q4 2021/22 financial year…
Natco is a niche company and their strategies are unique.
Discl - invested and accumulating since 2013 - 25% of portfolio at present
Hi…
@paresh.sarjani1 …The management said that the targetted Action Date is Dec 2020 and that is when they expect it to get an approval.
@babu44b…they were talking about the 3 niche agrochemical products that they plan to launch while talking about the mkt size of 2000 cr.
Regards,
Ranvir Dehal
Hi,
investor presentation for the Quarter ended June 30, 2020.
Thanks,
Deb
Company’s profits in FY20 was Rs461crs. Guided for 25% PAT growth implying PAT of Rs576crs in FY21. So at current market cap of Rs15420crs company trades at 26x FY21. If Revlimid gets launched FY22 PAT could be Rs1400crs also. Implying company trading at 11x FY22. Stock looks quite cheap compared to where other pharma names are trading
Disclosure: Invested
Hi Venkatesh - I think better to describe lenalidomide opportunity as "large’, and it is impossible to put a $ value to it at this stage. There are so many variables…Also, it is better for us shareholders not to advertise this opportunity too much 
I haven’t finished buying, the cheaper the share price, the better it is for us…
Discl - holding since 2013, continuing to add
venkatesh,
How would launch of Revlimid get to PAT of 1400Crs?. Would help if you could clarify
The management said this during the Q1 concall.
I was also surprised to hear this. But then, this is what it is.
What I understand, this drug is not going off patent. NATCO has out of court settlement where NATCO will be allowed to sell certain percent of drug every year. This market share will increase every year. So price erosion will not be there. Once drug is off.patented, NATCO is free to sell any quantitity. It is blockbuster drug having more than 5 billion dollar market 2 years before. And it was growing, I dont know the condition now.
This drug is special. Once doctor recommends, pharmacy enters the data and get approval from manufacturer, only then it is sold. So it is taken in extreme medical supervision. This will help NATCO to track the total quantitity of drug sold so that they can claim their market share.
10% of 5 billion dollar is 500 million dollar i.e. Rs 3600 crore. Here I am considering 10% market share in first year. This is the difference between reserch driven pharma company and pure generic pharma company. Patent holder is let down for out of court settlement. In court there were chances that patent was challanged.
Disclosure - No holding. May buy anytime.
Dr Reddy’s also has made a deal with celgene/bms
Good for natco due to the accelerate clause I think - they might be able to sell lenalidomide earlier than previously agreed - need to double check this…
Discl - holding and adding since 2013. Bought few more yesterday
Just a trailer of big picture… 
Nothing changed overnight… People just recalled that before Dr Reddy’s , Natco was the first mover on Revilimid And TV analysts shouting hard for market size of the drug on Twitter 
that means to say Natco gets priority over Dr.Reddy for selling it?
HI,
Natco Pharma would be the first company to launch Revlimid (lenalidomide) in March 2022 as Dr Reddy’s settlement clears the path for the company. Dr Reddy’s would launch sometime after it (we assume 6 months) and would have market share restrictions lower than Natco in our view,” said Sriraam Rathi, analyst at ICICI Securities.
Read more at:
Thanks,
Deb
The next most important trigger is FDA approval of Revlimid/lenalidomide which is expected before December 2020 according to the management - they have to get the approval for them to be able to sell it!
Here are some useful articles…
I did some work on some of the molecules of the Natco. Please find the details below.
Everolimus
Immunosuppressant to prevent rejection of organ transplants.
Used for treating renal cancer
Marketed brands
Zortress - USA - Novartis
Certican - EU - Novartis
Afinitor
Votubia
Evertor - Biocon
Competition
Natco
Dr Reddy’s
Glenmark
Biocon
Hikma
Par Pharma
Teva Pharma
Exclusivity expiration date - Feb 2023
Novartis
Afinitor/Vitubia had 1.5bn sales in 2019
Zortress/Certican has sales of 485mn$ in 2019
Sorafenib
Brands
Used in treatment of kidney cancer, liver cancer, thyroid cancer
Indian Patent office granted approval to Natco to manufacture Sorafenib in 2012, bringing price down from 2.8L to 8.8k for 120 tablets. Natco pays 7% royalty to Bayer
US patent is expected to expire in Dec 2020, Europe patent is expected to expire in July 2021
Nexavar has sales of approx 800mn$ in 2019
Ibrutinib
Brands
Typical cost in US for ibrutinib is $148k
Patent is expected to expire in Dec 2026
Sales of 3.5bn $ in 2018. Some reports state the size at 6.2bn$. fiercepharma pegs size sales at 7.2bn$
Lenalidomide
Brands
It costs 168k$ per year in US
Celgene almost had sales of 9.7bn$ in 2018
Alvogen lauched generic product in EU. Revlimid had sales of 1.8 bn$ in EU in 2017.
Alvogen can also launch product in US from March 2022 in volume limited way
Lapatinib
Used for treatment of breast cancer
Brands
Tykerb - US - GSK
Tyverb - EU - GSK
Patent expiry - US Nov 2021, June 2023
Tykerb had sales of 300mn$ which is down to 100mn$
The key questions that needs answering are -
gCopaxone probably represents 50% of the PAT for Natco. Natco has been holding on to 30% kind of market share in this product. What happens when Dr. Reddy’s get approval for this product? Gaining market share is not so easy in this product but what if Dr. Reddy’s managed to scale it?
gRevlimid has 10 ANDA filers and we have already seen 3 approvals. The situation remains quite dynamic. Also, we probably need to do some work on how easy it is to gain market share in this product ?
The MOST important question is - does Natco have a pipeline where they can launch one large value molecule every year or does it remain a one molecule wonder? Ibrutinib is a big molecule and Natco believes it is first to file in that molecule. How about others?
Disc - Invested from lower levels, not a buy/sell recommendation
Following are the tweet info from Dr Punit Bansal (@punitbansal14). This info is on public domain and I thought this will be useful for analysis on Natco.
Revlimid (lenalidomide) is among the top 10 selling drugs with estimated MS of $8.0B in 2024, used as 1st & 2nd-line multiple myeloma therapy in US through REMS program.
Natco has strong 20 Para-IV pipeline & remain focused on therapies with limited competition.
Natco US Business approach-4 key success products gTamiflu, gCopaxone, gDoxil, gFosrenol (story sofar)
Focus-Limited competition & opportunities
Future Key Launches-gNexavar 2020, gRevlimid Mar-22, gKyprolis 2027, gAfinitor & gNexavar timings will be crucial.
Patent for Lenalidomide expires in 2026/27 (I am not sure of the exact date) - so celgene has the exclusive rights to sell lenalidomide until that date in the USA. This is the most important point to note. No one else can sell except celgene - but, celgene could share patent rights with others…and that is what is happening here…
Celgene has settled with 3 companies so far out-of-court - natco, alvogen and dr reddys.
Natco settled first in 2015 and according to the agreement celgene will share rights to the patent with natco for mid single digit market share commencing from March 2022 and this will increase to not more than 1/3rd by 2026. After 2026 patent expires, and anyone can take the market share provided they have the fda approval. So there is certainty between 2022 and 2026…
The news article statement announcing the deal between celgene and Dr Reddy states mid single digit market share at a date starting after March 2022 (note - after March 2022). So, it is reasonable to assume that Natco got the most favoured outcome from celgene, followed by alvogen, followed by dr reddys. Hence Natco will be allowed to sell first followed by alvogen and then dr reddys (this is my assumption). Total sales allowed as per the agreement also will favour those who settled first…
Discl - very biased
Ibrutinib is another block buster molecule - patent expiry in 2026 I think. I think Natco is the only company who has filed with fda so far…
