Lupin - Back to back OC approvals - Edelweiss

Lupin has received two approvals of Oral contraceptives (OCs) during the week (Lutera and Plan B) and with this the company has a basket of 8 approved products in the OC portfolio. These molecules have limited competition and offer strong incremental revenue upside and margins to US generics over medium term.

Lupin has received an approval from USFDA for an oral contraceptive (OC) generic 'Plan B'. The total market size of there drug in USD 81mn and Watson and Perrigo are two the players in the market. It also received approval for Lutera which has potential market size of USD104 with only one competitor in the market. Management expects meaningful contribution from these opportunities to its US generics franchise.

Financial impact

We estimate USD8-10mn sales per annum from Plan-B assuming 20% price erosion and 10% market share for Lupin. We also highlight that Lutera offers sizeable opportunity for Lupin with sales contribution of USD15-20mn per annum as the product has only one other generic player (Watson).

Outlook and Valuations

Moreover, the products introduced over past six months offer strong scale-up potential and would incrementally contribute to growth of US generics base business over FY14-15E. We estimate sales growth of 27% CAGR in US (ex-Para IV) over FY13-15E. Maintain 'BUY/Sector Outperformer' rating at TP INR642.

Source : Equity Bulls

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