Analysts see $250 millon revenues from Ranbaxy’s Aricept deal

Ranbaxy Laboratories can earn $230-250 million in revenues in the next six months from the US following approval of its off-patent version of Alzheimer’s medicine, Aricept, by the US Food and Drug Administration (FDA), say analysts.

In a conference call after the results, Ranbaxy’s managing director Arun Sawhney had said though no timeframe can be given for resolution of the USFDA issue, the company will make all efforts and monetise its products in the market.

Sarabjit Kour Nangra, vice-president, research, Angel Broking, said the growth in the US would mainly come from the monetisation of the first-to-file (FTF) opportunities.

Currently, the company gets about 24-25% of its sales from the US market.

“This approval now paves the way for a launch. As Ranbaxy has the sole FTF for this product, it will be the only generic company for 180 days,” wrote CitiGroup Global Markets analysts Prashant Nair and Anshuman Gupta in a report. 

FTF status gives a company a 180-day period of exclusivity in the US, during which it is only company (other than the innovator) to sell the generic version of the product.

Aricept, a product developed by Eisai and Pfizer, had annual sales of $2.4 billion in the US. Alzheimer’s is an irreversible progressive brain disease affecting the elderly, which destroys memory and currently there are about 5.1 million patients in the US, according to the National Institute on Aging.

Despite the USFDA yet to clear Ranbaxy’s manufacturing facilities in Paonta Sahib and Dewas (in Himachal Pradesh and Madhya Pradesh respectively), which have been under the scanner over two years, for alleged violation of manufacturing norms, the company has managed to shift manufacturing to its Ohm facility in New Jersey and successfully get approval.

Experts predict the company to corner about 50% share in the market.

Ranjit Kapadia, vice president, institutional research at HDCF Securities, said if the product was manufactured in India, margins could have been 40%.

“But now the margins will be much lower.”