Worst over for Ranbaxy? Four reasons why its shares hit 52-week high - Firstpost

Shares of Ranbaxy Laboratories closed up 5.4 percent at Rs 497 on Friday after the company announced that its subsidiary Ohm Laboratories got the US FDA's approved for its hypertension drug, Valsartan tablets. The drug is a generic version of Novartis's Diovan.

The shares had touched a high of Rs 510.45 in the opening trade and hit 52-week highs during the intraday. Here's how the Ranbaxy stock has done over the last year:

Ohm, which will launch the tablets in the US, has received approval from the US FDA with 180-day marketing exclusivity for generic version in the treatment of hypertension and heart failure.

Shares of Sun Pharma, which had announced acquisition of Ranbaxy in April, rose over 4 percent to Rs 661. Its group firm Sun Pharma Advanced Research Company was up 1.1 percent at Rs 162.10.

Here are four key reasons for the investor bullishness:

1) Ohm Labs is the first filer for this abbreviated new drug application. So it gets 180 days of marketing exclusivity. This means no other generic company can sell this drug for 180 days. This is a huge positive for the Indian company, which has been facing huge regulatory issues in the US.

“Ranbaxy can garner 40 percent market share with 35 percent price erosion in exclusivity period,” brokerage Emkay said.

2) According to a report in moneycontrol.com, global brokerage UBS sees $200 million of sales in FY15 from Diovan with margins of 50 percent. It expects Rs 9.67 per share gain or 18 percent of EPS in this financial year.

3) Analysts hope that with the US FDA approving Diovan generic, two other products of Ohm – Nexium and Valcyte – may get the nod too. Sarabjit Kaur Nangra of Angel Broking told CNBC-TV18 that Nexium offers a bigger opportunity for Ranbaxy.

4) A section of experts even feels that the US FDA’s latest move may be an indication that the Indian company may finally be coming out of the major hassles in the US market. "...FDA will do what it is expected to do in terms of ensuring the compliance to manufacturing standards and approving products only when they feel that it is suitable for the market. At the same time, we have to understand that Toansa finally got the EU clearance. In terms of compliance and integration, things will be moving faster with Sun umbrella on top of Ranbaxy. Therefore, it is definitely a good start,” Vikas Dandekar of PharmAsiaNews.Com, told CNBC-TV18 yesterday.

With inputs from agencies