Strides Arcolab gets USFDA approval for cancer drugs

Strides Arcolab, which is in the business of manufacturing branded generics and injectables, has received USFDA approval for 2 more products, viz. Carboplatin and Oxaliplatin. Both these are cancer treatment drugs. The US market for Carboplatin and Oxaliplatin is estimated to be about US$ 35 million and US$ 1.4 billion respectively.

Injectables is a key area in which the company is bringing in more products. We believe that this is going to benefit the company in the future, as the lifestyle diseases drugs market is growing rapidly. These approvals have been received by its subsidiary Onco Therapies. The scrip closed down 2% to Rs 398.80 by the end of day’s trade on Nov 24, 2011. 

Many Indian companies are already present in the US due to the off-patent drugs opportunity. According to the presentation uploaded on the company's website, many drugs will go off patent even in the oncology segment by 2015. Large companies like Bedford, Sandoz, Watson Labs, and Fresenius Kabi Oncol already have their brands of Carboplatin in the US market, which will be highly competitive for the company. On the official USFDA website, we found that the marketing status of Bristol-Myers Squibb is 'discontinued'. The website also states that it has given tentative approval for Oxaliplatin in 50 mg and 100 mg formulations.

When we further researched on cancer drugs, we found that not many manufacturers are interested in low-cost cancer drugs in the US, and hence, there is a shortage of these. According to a Reuters report too, there is a shortage of chemotherapy drugs in USA, and there is no alternative for them. The report also says that doctors are delaying chemotherapy cycles for patients due the shortage of the drugs. Strides will definitely benefit from this shortage, and this approval has come at the right time for the company. 

Strides Arcolab has good exposure to the North American market, and derived about 23% of its revenues from this region in 2010. The company has witnessed a growth of 200% in 2010. It is building its portfolio in specialties care. All the new approvals are in the injectables segment, which underlines its ambition to build a portfolio in this segment.