Shares of Dr. Reddy’s Laboratories (DRL) surged on Friday after the company said it planned to start selling in the U.S. a generic version of British drugmaker Indivior Plc’s Suboxone (buprenorphine and naloxone) sublingual film used in the treatment of opioid dependence.
The Hyderabad-based firm said it had received approval from the U.S. FDA for buprenorphine and naloxone sublingual film, 2 mg/0.5 mg, 4 mg/1 mg, 8 mg/2 mg, and 12 mg/3 mg and would be introducing the product in the U.S. with an approved risk evaluation and mitigation strategy programme.
DRL climbed 3.65% on the BSE to ₹2,351.10, the stock’s highest close in more than four months. Indivior plunged by more than 20% in London after the USFDA approved the first generic versions of Suboxone Film, an opioid addiction treatment that generates 80% of the company’s revenue.
White House economists said in a report in November that opioid drug abuse, which has ravaged parts of the U.S. in the recent years, cost the economy as much as $504 billion, or 2.8% of the GDP, in 2015.
‘Critical time’
Suboxone had sales of about $1.86 billion in the U.S. for the 12 months ended April 2018, DRL said, citing IMS Health.
“With opioid addiction becoming increasingly prevalent in America, the full approval and launch of our generic equivalent of Suboxone could not have come at a more critical time to help patients,” DRL’s CEO (Developed Markets) Alok Sonig said in the statement.
Shares in Indivior, which was spun out from Reckitt Benckiser in 2014, were down 22.7% at 0925 GMT and the biggest loser on the FTSE midcap index.
Mylan NV also received approval to market the substitute drug.
One analyst said the at-risk sudden introduction was a surprise and could threaten Indivior’s 2018 guidance.
Indivior could seek an injunction to try to halt a launch of the generics or launch its own authorised generic, analysts at Jefferies wrote in a note.
“If Indivior was to prevail in any of its on-going legal challenges then Dr. Reddy’s would be liable for damages,” Jefferies said, estimating that Indivior’s 2018 earnings per share could be hit by as much as 50%t if Dr. Reddy’s has sufficient inventory and launches by July 1.
( With inputs from Reuters )
