Yet another pharma company share took the fancy of stock market traders on Monday. The share price of Glenmark Pharmaceuticals shot up by nearly 35 per cent in intra-day trade. It rose by ₹126 to touch a high of ₹573 from the previous close of ₹409. The share closed at ₹525.
The gains were on the back of the announcement by the company that it had launched an anti-viral drug ‘Favipiravir’ for the treatment of patients with mild to moderate Covid-19 infection. The drug has been priced at ₹3,500 for a strip of 34 tables. It will be available as a 200 mg tablet pack under the brand name ‘FabiFlu.’
Cipla has rolled out Remdesivir, another tablet for Covid-19 patients, and the share price of the company climbed to a 52-week high of ₹696 on Monday before it closed the day at ₹655.
FabiFlu is the first oral Favipiravir-approved medication in India for the treatment of Covid-19, Glenmark Pharma said.
“Favipiravir can be used for coronavirus patients with co-morbid conditions such as diabetes and heart disease with mild to moderate Covid-19 symptoms. It offers rapid reduction in viral load within four days and provides faster symptomatic and radiological improvement...,” Glenmark said.
In a note on Glenmark and its rival Cipta, research firm Investec said, “Surprised by the upmoves in stocks. Both launches would be decent earners for companies in India. Difficult to see sustainability of sales; don’t see any of the brands crossing ₹100 crore, prima facie both Remdesivir and Favipiravir will witness significant competition going ahead. At least three to four others are expected to enter within next 15-30 days in (for selling) Favipiravir, and five to six should enter once DCGI approves Remdesivir. Products will ultimately be sold through institutional channels and pricing would be significantly lower.”
Regulatory hurdles, a big risk
On Glenmark, an ICICI Securities report said, “We maintain our estimates and raise target price to earnings (PE) to 15 times from 12 times to factor in potential upside from Favipiravir and strong research and development (R&D) capability.” It added that regulatory hurdles and competitive pressures in the US could be downside risks. Glenmark, however, has not given any earnings guidance on the drug launch.
The stock currently trades at valuations of 14.4 times FY21 and 12.6 times FY22 earnings and enterprise value EV/EBITDA multiple of 7.9 times FY21 times and 7.1 times FY22. Glenmark had received the Drug Controller General of India’s (DCGI) nod to conduct phase-3 clinical trials with oral anti-viral Favipiravir among Covid-19 patients in early May. Favipiravir has been under compassionate use in Japan and 2,050 patients have already been administered the drug, and high recovery rates were observed at seven and 14 days of treatment. It has also been approved by Italy and China for experimental/ compassionate use in Covid-19 patients.
An IDFC Securities said, “One lakh treatment courses for Favipiravir will imply an opportunity worth ₹60-90 crore. Export is the bigger opportunity as compared to domestics.
“Already getting enquiries from multiple countries. Efficacy to be more clearly established once full clinical data is made public.”
IDFC Securities has an ‘outperform’ rating on the stock and a price target of ₹536.