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Dr. Reddy's wins US court respite for generic Suboxone sale

Indian drugmaker aims to soon revive launch activities for drug addiction treatment

Dr. Reddy's Laboratories and other Indian pharmaceutical companies are grappling with stifling competition and falling prices in the U.S.   © Getty Images

MUMBAI (NewsRise) -- Dr. Reddy's Laboratories got a breather after a court allowed it to sell a generic version of Indivior's drug addiction treatment Suboxone Film in the U.S., where the Indian company is short on new launches.

Dr. Reddy's said the U.S. Court of Appeals for the Federal Circuit lifted a preliminary injunction concluding London-listed lndivior did not show that it is likely to succeed on the merits of the main infringement case.

"As a result of the ruling, Dr. Reddy's will resume its launch activities as soon as permitted," the Indian company said in a statement to stock exchanges late Tuesday.

The drugmaker had launched the product in the U.S. in October after winning the Food and Drug Administration's approval in June. It had issued a caveat that the launch was "at risk," citing an ongoing patent litigation with Indivior. However, a lower court 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 that has no other competitor, had U.S. sales of about $1.86 billion for the most recent twelve months ended in April, according to IMS Health. Citigroup expects generic Suboxone to generate about $50 million in revenue for the rest of this fiscal year ending in March. It assumes sales of up to $140 million for the next year.

Shares of Dr. Reddy's surged in Mumbai trading on Wednesday, closing 5.9% higher. The benchmark BSE Sensex index declined 0.8%.

To be sure, the company is likely to enjoy limited competition only for the first few years before more competitors enter. Analysts expect Suboxone to have three generic players this fiscal year, including Mylan, which has already won the FDA approval for the drug.

Dr. Reddy's and other Indian pharmaceutical companies are grappling with stifling competition and falling prices in the U.S., the world's largest drug market, as the FDA expedited its approval rate for generics.

Suboxone is one of the key products among Dr. Reddy's 15 new launches expected in the U.S. this year. Though the company has one of the most valuable drug pipelines among its rivals, the timing of approval of big-ticket drugs remained hazy, creating uncertainty about the extent of recovery of its profitability.

Meanwhile, the FDA's clampdown on manufacturing plants of many drug makers posed an additional challenge to the Indian pharmaceutical industry. Dr. Reddy's launches in the U.S. suffered due to regulatory issues at three of its plants that faced FDA warning letter in 2015.

--Dhanya Ann Thoppil

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