I did some reading on Nexium. I have summarized my findings below:
gNexium has a market potential of USD 2 bn. Recently, Teva has got approval for gNexium. Ranbaxy’s exclusivity for selling gNexium has expired. The competitors who have ANDA approval are available in the attached spreadsheet.ActiveIngredient_OB_Rx.xls (20.9 KB) Torrent is the 8th filer and is awaiting approval. With already 7 competitors in the market, this is not a limited competition launch like gAbilify.
Some of the information posted above is sourced from Nomura’s research report dated March 9th.
Nexium tablet currently has just one generic player, IVAX which is a subsidiary of Teva, apart from the innovator Astrazeneca. The other molecule you have tabulated are different. You will have to search for just esomeprazole magnesium. Sun has approval for Nexium injectable.
Some articles say Astra Zeneca had Nexium sales at ~ USD 2.8-3bn for the first 9 months of 2014 (But, at this point in time, till Torrent gets ANDA approval, this number crunching can wait. Hope they get it:-) )
Management has clearly highlighted that the kind of gains that can accrue from US molecules have a lot to do with the kind of competition and size of molecule. After a point there is very little that a management can do except to pray for luck. They had the luck in abilify bcos Sun and Lupin were not allowed to market the drug which effectively left the field open for the four players in the fray and that too for a molecule which had a size of 5 billion USD.
For g nexium one has to see what kind of competition is there at the time of launch whenever that happens. The good part is that both abilify and nexium can provide sustained revenues beyond the limited competition period bcos the molecules are sort of chronic therapy molecules and need to be taken for longer periods and often indefinitely.
It was heartening to see that this quarter,growth was mostly broad based for Torrent.In constant currency terms,both Brazil & European markets did well.Domestic markets too,have done great,thanks to Elder’s portfolio & some price rises Torrent took.
On the production side,the company is starting to focus on injectables,oral dosages,ointments.I was most happy to hear that the company knows its weak spots & is addressing them at a good pace.The company will focus on a few geographies going ahead(15-20),launch branded generics and try to build a decent market share.The Dahej facility too,shall start to bring in revenues by fiscal end.Nexium approval is expected by end of CY15.The R&D spends are expected to rise 3x on an absolute basis.Torrent wants to build a formidable pipeline for the US markets.Expect to file 25 ANDAs from Zyg Pharma,over next 2-3 years.
As Hitesh bhai already mentioned,being a CNS drug,Abilify,will pick up slowly.The company says that a large amount of profit from Abilify is ‘unrealised’.So,Q2 should also be excellent on bottomline.Tax rate will be the same as FY15.
All in all,the coming 2-3 quarters look good.As the pipeline builds up,we will have even higher visibility for US markets(a few years ahead) Being FTFs/complex drugs,the margins should also be quiet good…of course,depending on the competition.
One of the key launches expected in fy16 for Torrent was Detrol LA. Now the approval has come for Torrent.
There are only limited number of players 4-5 currently and roughly sales were around $500mil USD.
Appears approval is limited to Extended Release Oral Capsules 2mg and 4mg dosage (Detrol LA) that has one more generic player Mylan and innovator (total three players only).
I didn’t see reference to Torrent in Oral Tablet 1mg and 2mg (Detrol) yet. Should this be coming soon or later?
As per ICICIdirect report Torrent has got a tentative approval for Amlodipine and Omlesartan Medoxomil for generic version of drug Azor for bloodpressure. Original inventor Daiichi Sankyo
Market size US$ 174 million
Whats the view on the stock due to Brazil exposure ? It has around 13% sales from the region. Have not looked the at company closely but liked its last quarter numbers. So does the current fall in price a good entry point .
If u look at q1 results which had a lot of revenues coming from US, the following is the composition of revenues
US 46% 880 cr
India 25% 490 cr
Brazil 7% 134 cr
Eurpoe 12% 230 cr
ROW 5% 90 cr
Now coming to Brazil, how much the currency depreciates is to be monitored and then one has to think about what kind of problem torrent could have. Luckily for the company, this Brazilian thing comes at a time when US and Indian markets are firing on all cylinders for the co. And hence the actual impact shold be negligible. But if this problem continues beyond fy 16 then next year US may not be such a huge contributor to overall revenues and then the Brazil contribution could increase. But for that management has some time to react and take remedial action.
Another interesting aspect for this year is that
if u look at consolidated figures, PBT was 859 crores on which co paid a tax of 410 crores. (this is due to regulatory requirements bcos whatever is shipped (even though it is not recognised as revenues prior to actual sales) entails tax payment.) Management has categorically stated in concall that tax rate will be as per earlier year on an overall yearly basis. So till the company makes PBT of around 2050 for the year, it will need to pay a tax of 410 crores on ball park tax rates of 20% as per last year. Now co has alread paid the 410 crores and hence the incremental nearly 1200 crores of PBT will not attract much by way of tax and hence the figures for next few quarters could look much better than expected.
@hitesh2710 bhai, How do you compare Torrent with Ajanta, given that you have studied both the companies and understand their business better than most other people? I have small position in both Torrent and Ajanta and trying to figure out how to build on these positions now that both are in the same price range, but Torrent seems to be attractive on valuation front while Ajanta looks to have had a better business model.
Minocycline: Torrent Pharma purchased an antibacterial drug, minocycline tablets and capsules, in the USA, which was divested by Ranbaxy Laboratories (Ranbaxy) under the direction of the US competition commission (as a condition of merger with Sun Pharmaceutical Industries). The market size of the product is pegged at $700 million and Ranbaxy held a market share close to 27%. Torrent Pharma has already launched this product in April 2015.
Key molecules for US market from torrent pharma in fy 16 would remain abilify and l detrol. Innovator had sales of 570 million USD and there seems to be limited competition for torrent in the molecule.
projections for the products based on a recent in depth research report are
abilify for fy 16 – 156 million USD and for fy 17 —20 million USD.
detrol for fy 16 — 49 million USD and for fy 17 ----- 57 million USD.
nexium for fy 16 --11 million USD and for fy 17 ----45 million USD
minocycline at 20 million USD for both fy 16 and fy 17.
We will of course need the pharma enthusiasts in our group to verify these projections.
Abilify sales in the Q1FY16 itself would be around USD 100 million. For full year on conservative basis, we can assume Abilify sales of around USD 250 million (considering increased competition from Q3 onwards). FY17 would be very difficult to predict and will depend on the competition coming in. But I still think it will be more than USD 20 million.
Detrol sales might be in line with what many research reports are predicting.
Considering Nexium has four players already in the market and Torrent whenever it gets approval, will be a late entrant. In whatever limited knowledge I have regarding pharma and in my interactions with industry experts, whenever a generic biggie like Torrent or Mylan are present in a particular market, they take away a lion’s share and players like Torrent have share of around early teens or high single digits. Regarding Nexium market size, although the IMS sales were around USD 5 billion, the innovator, AstraZeneca used to offer discounts upto 50 - 60% on the price to the insurance companies (as per an article I had read about it). We can assume the size to be around USD 2 billion on conservative basis. Nexium sales are difficult to predict for Torrent considering the date on which it gets approval. We can assume it to be in line with what research reports are predicting.
