Dr. Reddy's (RDY) Inks Deal To Acquire Portfolio Of 42 ANDAs
Zacks Investment Research | Apr 15, 2019 12:08AM ET
Dr. Reddy’s Laboratories Ltd. (NYSE:RDY) entered a definitive agreement to acquire the yet-to-be-marketed portfolio of 42 non-marketed Abbreviated New Drug Applications (ANDAs) in the United States. The portfolio includes more than 30 generic injectable products.
These products will be technology transferred and be ready for launch within the next one to two years. The value of total addressable market for these products in the United States is approximately $645 million for the calendar year ending in December 2018, according to IQVIA.
The deal is in sync with the company’s strategy to strengthen its portfolio in its chosen growth markets. This transaction will help the company expand its injectable products portfolio in the U.S. market and globally.
Shares of the company have increased 7.1% in the past year compared with the industry ’s growth of 6.3%.
Dr. Reddy’s enjoys a strong position in the generics market. New product launches, especially complex generics, should help drive the generics business at regular intervals. In the third quarter of fiscal 2019, the company launched 10 products, including some limited-competition products like Colesevalam, Dipyridamole, Aspirin XR, Sevelamer sachet, Sevelamer unit dose and Omeprazole OTC tabs.
However, the company’s North America base business is witnessing pricing pressures since the last few quarters, due to enhanced channel consolidation and increased competition from sales of some of its key generic products.
The United States’ generics industry is facing significant competitive and pricing pressure. The ongoing consolidation of customers in the industry has led to increasing price erosion and decreasing volumes.
Dr. Reddy’s is undertaking some measures to combat the ongoing challenges. The company plans to modernize some of its infrastructure, systematically implement new quality management system, and automate some of the critical manufacturing and quality-related processes.
In order to revitalize growth, Dr. Reddy’s is focusing on accelerating the development of its complex generics portfolio, and making efforts to ensure that the approvals come in time through appropriate risk management and proactive measures to deal with possible deficiencies.
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Zacks Rank & Stocks to Consider
Dr. Reddy’s currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the same space are Mallinckrodt public limited company (NYSE:MNK) Bausch Health Companies Inc. (NYSE:BHC) , and Evoke Pharma Inc. (NASDAQ:EVOK) . While Mallinckrodt carries a Zacks Rank #1 (Strong Buy), Bausch Health and Evoke Pharma carries a Zacks Rank #2 (Buy). You can see .
Mallinckrodt’s earnings per share estimates have increased from $7.46 to $8.22 and from $7.34 to $7.84 for 2019 and 2020, respectively, in the past 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters at an average of 16.78%.
Bausch Health’s earnings per share estimates have increased from $3.83 to $3.92 for 2019 and in the past 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters at an average of 88.32%.
Evoke Pharma’s loss per share estimates have narrowed from 59 cents to 29 cents for 2019 in the past 60 days.
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