Dr. Reddy’s Labs To Launch Generic Quetiapine In USA

After the launch of the generic version of Geodon (Ziprasidone HCL) on March 3, 2012, Dr. Reddy’s Labs (DRL) is set to launch another big ticket generic named Seroquel (Quetiapine) in the US markets by the end of this week. This new product is in the therapeutic segment of antipsychotic drugs. The news has come after the innovator company AstraZeneca lost the lawsuit in the UK courts to restrain the US regulator USFDA from granting the final marketing approval of the generic Seroquel till December 2, 2012. The patent of this product lapses on March 26, 2012, i.e. today. According to an article published in the Economic Times, DRL will launch this product some time in this week.

Currently, it is not clear who holds FTF (First to File) status with respect to this product. There are two other pharma companies – Teva Pharmaceutical and Roxane Laboratories – which also have received tentative USFDA approval for this product.

According to an article on Inpharm.com, the patent for immediate release of Quetiapine expired in September 2011, while that for the paediatric version will end by March 26, 2012. The patent for the extended release version, however, is valid till 2017. Last year, AstraZeneca granted generic licenses to Handa Pharmaceuticals and Accord Health to launch the generic version of Seroquel XR on or before year 2016, but it is not clear whether they have launched their versions.

Seroquel is an antipsychotic drug that has Quetiapine as an active ingredient. It is used in the treatment of schizophrenia. Last year, AstraZeneca saw US sales of 3.34 billion of the immediate-release Seroquel, while the extended release version had a sales figure of USD 779 million. The worldwide market for Seroquel products is worth about USD 5.83 billion.

With the release of generic Quetiapine, we expect the market to get divided between the different players and a massive erosion of the price. In case there is a 90% price erosion, DRL would still be able to manage sales of about Rs 417.5 crore. This sale is about 6% of DRL’s FY11 sales. The company has recently made some major launches in USA, which will boost its topline and bottomline in the coming quarters.

On a YTD basis, the DRL scrip is up by 5%. The scrip has shown some downtrend in the current fall of the Indian equity markets, but we believe that it will go up as its quarterly results are nearing. We advise our readers to enter the counter, as it presents a good investment opportunity.

We have already carried an analysis of DRL in Dalal Street Investment Journal, Vol. 27 Issue No. 7 with a ‘buy’ call on it. With this news, we see further good business growth and hence, maintain our call.