CMP = Rs 369 (as of April 25)
Price target: Rs 558
Key points
- Ranbaxy Laboratories (Ranbaxy) has received the US Food and Drug Administration’s (USFDA) approval to manufacture and market Pravastatin sodium tablets (Pravastatin) of strengths 10mg, 20mg, 40mg and 80mg, with 180-day market exclusivity in the US healthcare system for the 80mg strength.
- Pravastatin is the generic version of Bristol Myer Squibb’s Pravachol. The product lost patent protection in April 2006. The total annual market sales for all strengths of Pravastatin were $1.19 billion. The annual sales for the 80mg strength alone stood at $209 million.
- I believe the launch of Pravastatin will generate $45.6 million in revenues and $17.2 million in profits in CY2007E, yielding incremental earnings of Rs1.8 per share for Ranbaxy. This implies a potential price upside of approximately Rs40 from the current levels.
- I maintain our Buy recommendation on Ranbaxy with a price target of Rs558.
