MUMBAI (NewsRise) -- Dr. Reddy's Laboratories resumed sales of the generic version of U.K.-based Indivior's blockbuster opioid treatment Suboxone film in the U.S., a day after an appeals court lifted a ban that had stopped the Indian company from selling the drug for almost six months.
The U.S. Court of Appeals for the Federal Circuit has concluded that lndivior has not shown that it is likely to succeed on its claim that Dr. Reddy's product infringes its patents, Dr. Reddy's said in a statement to stock exchanges late Wednesday.
The drug maker had launched the product in the U.S. in October after winning the Food and Drug Administration's approval in June. It had at that time issued a caveat that the launch was "at risk," citing an ongoing patent litigation with Indivior. A lower court later banned the sale primarily on the grounds that Indivior is likely to succeed the main patent litigation.
In April-June, Dr. Reddy's booked about $15 million to $20 million in revenue from the initial launch. Suboxone, a high-margin product which had no other competitor at that time, had U.S. sales of about $1.86 billion for the twelve months ended in April, according to IMS Health.
The latest court verdict vacates a district court's preliminary injunction that prevented Dr. Reddy's from selling the generic Suboxone, the company said.
Meanwhile, Indivior on Wednesday said its U.S. affiliate Sandoz launched the generic version of Suboxone in the country. This business decision is based on the market impact expected from the anticipated "at risk" launch of generic Suboxone in the U.S. by Dr. Reddy's and other competitors, the company said in a separate statement.
Morgan Stanley expects generic Suboxone to gross in $50 million to $70 million in sales for Dr. Reddy's, even though it flags 65% to 70% price erosion on account of competition from four to five players. Analysts say the expectation of a windfall from the drug has been moderated by the launch from companies such as Alvogen and Mylan.
Analysts have been concerned about the competition and uncertainties surrounding this drug and Dr. Reddy's dependence on generic Suboxone to drive growth. Earlier this week, Citigroup said its primary concern around Dr. Reddy's emanated from the drug maker's "high concentration risk" surrounding three drugs, including the generic Suboxone, that will account for up to 41% of its earnings in fiscal year 2021.
To be sure, the company received an additional fillip last week after the U.S. drug regulator gave a green signal to lift a warning letter on the company's formulations plant in Duvvada in southern India. The cancer formulation plant accounts for a fifth of the 100 products in the company's pipeline.
The site had been under the warning letter since November 2015 and it had further received observations from the regulator after a re-inspection in October. The agency has closed the inspection and classified it as Voluntary Action Indicated, suggesting that any adverse action by the regulator is unlikely.
While the company received warning letters for two other plants along with Duvvada, one has been cleared and the other still reels under the regulatory scanner.
Shares of Dr. Reddy's gained 3% in Mumbai trading on Thursday, while the benchmark S&P BSE Sensex closed 0.4% higher.
--Dhanya Ann Thoppil