FDA grants Nexium’s approval to Teva: (-ve for RBXY/SUNP and +ve for Cipla, LPC, DRRD, and TRP) Event: · FDA grants first approval of generic equivalent of Nexium (esomeprazole, 20/40mg, Brand sales of $2.2bn) to Teva, after conceeding in early Nov’14 that its decision of granting tentative approval to RBXY for Nexium and Valcyte (valganciclovir, 450mg, Brand sales of $450mn) was in error given the compliance status of its facilities. · While the US FDA was categorical in recinding the 180 day exclusivity of Valcyte at that time, it did not make any observations on the approval status of Nexium. · Street was tentative in factoring the launch timelines given the RBXY’s intent to persue the issue in the higher courts. However, yesterday’s approval of g.Nexium to Teva seals the fate on RBXY for the Nexium, as aswell. Impact: · the FDA’s decision to re-consider the status of TAs (tentative approvals) on Valcyte and Nexium to Teva have sealed the scope for RANB in Nov’14 itself and its efforts to litigate in the higher courts had little possibility of salvaging its status. · it is negative for RANB and SUNP; though we acknowledge the scope for synergies and see management’s guidance of $250m cumulative synergies at the end of year-3 as realistic, we see the integration hurdles, particularly, FDA remediation hurdles, and believe the medium-term value creation for the company is more sensitive to growth and margin assumptions. · Teva’s approval is incrementally positive for Cipla, as it is the API supplier to Teva for Nexium. Also, US FDA approval to LPC, DRRD, and TRP filing in due course.
Posted on: Tue, 27 Jan 2015 04:05:56 +0000
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