Dr. Reddy's Laboratories Ltd. share price target

Dr. Reddy's Laboratories (DRL) posted robust 2Q numbers as operating performance bettered expectations despite in-line sales. The operations were boosted by improved leverage and favorable product mix. Benefit of gNexium approval is expected in 3Q. While we are structurally positive on the R&D; investments made for longer term, near term risks of Srikakulam F483, delayed US approvals and currency headwinds in Venezuela make us cautious. We introduce our FY18E numbers in this note and roll forward our...

Dr Reddy's Laboratories today received approval of USFDA to launch Esomeprazole Magnesium Delayed-Release Capsules USP, 20 mg and 40 mg, a therapeutic equivalent generic version of NEXIUM (esomeprazole magnesium) Delayed-Release Capsules in the US market. Esomeprazole is a proton pump inhibitor that reduces the amount of acid in stomach. The Nexium brand and generic had US sales of approximately USD 5.2 bn MAT for the most recent twelve months ending in July 2015 according to IMS Health. We have factored revenue of around USD 39 mn (previous USD 11.3 mn) in FY16E and USD 52 mn (previous USD 30 mn) in FY17E from Esomeprazole Magnesium.

Until the launch of Hetero (Camber is its marketing arm), the price correction in branded Nexium was just 26% and the generic penetration was 33%. Lupin and Aurobindo are awaiting approval of gNexium in the current quarter. Considering that all players in the...

However, Indian business showed steady growth & North America posted modest growth which includes Habitrol sales for full quarter. Emerging markets posted strong growth on back of higher contribution from Venezuela. EBIDTA grew by 9.7% YoY to Rs.832crs & EBITDA margin stood at 21.5% contracted sequentially mainly on account of lower gross margins due to vScore: vScore (Value Score) is our proprietary company rating system f...

Background: Dr. Reddy's is a global generic pharmaceutical company with focus on the US, Europe, Russia and India. Finished dosage and API account for a bulk of the revenues, with up to 60% of sales derived from overseas operations. With a strong research pipeline, its R&D; is focused in the areas of cancer, diabetes, cardiovascular, inflammation and bacterial infections. Dr. Reddy's offers a portfolio of products and services including APIs, custom pharmaceutical services, generics, biosimilars, differentiated formulations and NCEs. It has one of the largest ANDA & a patent challenge pipeline has strengthened presence through the launch of several...

US and new launches (including Namenda, Propofol, Xeloda, Angiomax, Nexium, Copaxone) will sustain nearterm growth. What could surprise our FY17 estimates positivelyanddrivevaluegrowthfurtherisDRL's(guided)launchofthreeNDAsinearly...

DRL's revenues rose 6.8% YoY to Rs 37.6 bn (lower our estimates of Rs 40.3 bn) due to better performance of US, India and Europe in global Generics and moderate growth in PSAI segment. Gross margins increased by 180bps YoY to 61.1% in Q1FY16 (higher than our estimates of 56%) on account favorable currency impact.

Buy on dips to Rs 3,294 - Rs 3,370 for Target of Rs 3,600 in 1 quarter

Its complex drug pipeline includes various technology platforms based drugs like 2 microspheredrugswithtargetmarketof$2.5bn,2liposomaldrugs(targetmarketof$ 1.0bn), 2 particulate system based drugs ($2.0bn) and 4 readytouse (alternate to...

Background: Dr. Reddy's is a global generic pharmaceutical company with focus on the US, Europe, Russia and India. Finished dosage and API account for a bulk of the revenues, with up to 60% of sales derived from overseas operations. With a strong research pipeline, its R&D; is focused in the areas of cancer, diabetes, cardiovascular, inflammation and bacterial infections. Dr. Reddy's offers a portfolio of products and services including APIs, custom pharmaceutical services, generics, biosimilars, differentiated formulations and NCEs. It has one of the largest ANDA & patent challenge pipelines has strengthened presence through the launch of several...