Dr. Reddy's Laboratories Ltd. share price target

Dr Reddy's (DRL) has announced the settlement of its Revlimid capsules (Lenalidomide) patent litigation with Celgene [Bristol Myers Squibb (BMS)] in the US. This makes DRL the third player after Natco and Alvogen to sign a settlement agreement with the innovator for gRevlimid. Under the terms of the settlement, Celgene will provide DRL with a license to sell generic volume-limited amounts of gRevlimid capsules in the US after Natco's launch in March 2022 subject to regulatory approval. This limited volume constraint will be applicable till January 31, 2026 post which DRL will be able...

Dr Reddy's settles with BMS on multiple myeloma drug, Revlimid for a limited volume launch during FY23-26, post which the volume cap will be lifted. Dr Reddy's is the third company to settle post Natco and Alvogen, though details of the settlement term are not known yet. The key...

Dr Reddy's (DRRD) has announced a key settlement of the patent litigation with Celgene for US Revlimid (lenalidomide capsules) used to treat multiple myeloma.

We increase our EPS forecast by 7-8% for FY21/22 to factor gVascepa launch and our target multiple to 22x (from 20x earlier) to factor improved visibility in the US and API business. We upgrade Dr Reddys to ADD (from REDUCE) and increase TP to Rs4,670. The growth visibility of the US business has improved with the strong momentum of new launches (12 launches in YTD FY21) including niche ones such as gCiprodex (first to market). The dependence of gCopaxone and gNuvaring on FY22 earnings reduces with the new product flow and favourable ruling of gVascepa (now in our estimates). Structural tailwinds in the API business (15% of revenues) will lead to double digit growth over the next few years.

We are initiating coverage on DR REDDY with BUY rating and a target price of Rs 5,270 (PE of 25x for FY23E earnings) which implies an upside of 19% from the current levels.

Other operating income at Rs. 118 million compared to Rs. 3.8 billion in Q1FY20. Previous year included Rs. 3.5 billion received from Celgene pursuant to an agreement entered towards settlement of any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company's ANDS for a generic version of REVLIMID brand capsules,...

DRRD is well-placed to erosion in the base business, b) robust ANDA launches for the US segment, c) improving benefit from cost rationalization, d) a favorable demand-supply scenario in the PSAI segment, and e) synergy benefit through the addition of the Wockhardt portfolio. After three years of YoY decline in US sales, DRRD exhibited 5% growth in FY20, led by new launches, improved market share, and the reduced impact of price erosion in the base portfolio. The PSAI business has remained sluggish over the past three years, with a CAGR With a strong order book, a favorable demand-supply scenario, and the low base of the past year, DRRD delivered 88% YoY growth in the PSAI segment in to de-risk API supplies and b) stocking up on APIs in preparation of unexpected We expect the PSAI business to post a CAGR of 23% over FY2022 as clients focus on alternate sources of RMs to de-risk their businesses.

Despite challenging times, the US remains a key driver for the company, contributing ~37% to total revenues as of FY20. The company has a strong pending pipeline comprising 99 ANDAs (54 Para IV filings, 28 FTFs) and two NDAs under 505 (b) (2) route. We expect US sales to grow at a CAGR of...

We downgrade DRRD to HOLD (earlier Accumulate) due to limited upside potential at current valuation. We retain our earnings estimates and TP of Rs4,326 (PE 24x FY22E). DRRD continues to be one of the best companies in large cap pharma space structurally, though there is limited headroom for further upgrade in earnings estimate and PE expansion. However re-rating in...

Strong pipeline and new product launches are the key positives. Additionally, smooth operation ahead of VAI from US FDA for the company's facilities should support topline growth over the medium term. Hence, we upgrade our rating to BUY on the stock with a revised target price of Rs. 4,344 based on 23x FY22E adj. EPS....