Buy Lupin; target of Rs 1085: Prabhudas Lilladher

Prabhudas Lilladher's research report on Lupin

LPC launched gTykerb after its core patent expiry on 29th Sept CY20. LPC would be the only generic player over the next 18 months as there are no pending ANDA’s for Tykerb. LPC is a marketing partner to distribute the generics in the US while NATCO would supply formulations (with captive API) with a fixed mark-up on the cost of production. LPC will however bear the lion’s share of the adverse outcome if the innovator fights for its last patent which expires in CY-29. We estimate peak sales of US$20-25mn in FY22E with a 60% market share and 30% price erosion. We believe LPC would have an advantage with the first gTykerb launch which could lead them to sustain 60% market share. With 60/40 profit share for gTykerb, we expect an EPS contribution of Rs0.40 and Rs1.10 for FY21E and FY22E.

Outlook

We remain upbeat of LPC on regulatory revival theme and new launches in the US market. We have a BUY rating and our TP is Rs 1,085 based on 24x (PE) on FY22E.

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