The US drug regulator’s decision to allow Ranbaxy to sell the generic version of Novartis’ hypertension drug Diovan (valsartan) came as a shot in the arm for Ranbaxy and its new parent Sun Pharma. The stocks of Ranbaxy and Sun Pharma cheered the announcement, touching yearly highs of Rs 511 and Rs 675 respectively in trade today.
So far only Novartis (the innovator) had the rights to sell this drug; it has sold $2.2 billion worth of Diovan in the last 12 months. Being the first generic filer, Ranbaxy will now be the only other drug manufacturer that can sell this product for a period of six months. After six months other companies such as Lupin can also enter the market.
Assuming that Ranbaxy prices the generic version at a 60 per cent discount to Novartis and garners 30 per cent share of the market, generic Diovan may add over $250 million (Rs 1,500 crore) to Ranbaxy’s revenues. Being an exclusive product the margins are expected to be healthy.
The approval for Ranbaxy’s generic Diovan, which was delayed by almost 21 months due to the ongoing tussle with the US drug regulator, has raised hopes for the successful monetisation of other exclusive opportunities such as Nexium in the near future.