Cipla gets R300cr shot from generic Lexapro

Drugmaker Cipla stands to reap a bounty of more than Rs300 crore ($60 million) on generic Lexapro, a blockbuster anxiety and depression drug.

All thanks to its manufacturing tie-up with generic firm Ivax, which Israeli generic behemoth Teva acquired in 2006 for $7.9 billion.
Teva holds the first-to-file (FTF) status on Lexapro, which commands sales of $2.8-2.9 billion a year.

The expiry of the patent on Lexapro — held by US-based Forest Pharmaceuticals — sets the stage for Teva to launch its generic version and enjoy a 180-day, or six-month, exclusivity on its sales, till August.

This is where Cipla’s tie-up with Ivax comes into the picture.
Teva, which has cancelled several of Ivax’s tie-ups post-acquisition, appears to have retained the one for generic Lexapro.

This means, Cipla would be manufacturing the generic tablets at its Kurkumbh facility in Maharashtra despite having no direct participation in the Lexapro game.

According to Ranjit Kapadia, senior vice-president, Centrum Broking, even if Cipla is just manufacturing the product and does not hold the FTF status, it stands to benefit. During the exclusivity period, apart from the innovator Forest and the authorised generic by Mylan, Teva’s version — made by Cipla — would be the only other one.

Call it a lucky stroke, but the Rs300 crore windfall is a mood-lifter all the same.

Indeed, more gains may be in the offing, according to analysts.
According to a report by Morgan Stanley, though this could be a one-off opportunity for Cipla that ends post the exclusivity period for Teva (unless Teva decides to continue with the tie-up and competition is not stiff post exclusivity), Cipla could get $60 million, with margins as high as 50%.

“Post exclusivity, margins for Cipla could range from 15-20% which is still good,” said an analyst from a local brokerage.
Cipla officials could not be reached for comment.