Strides Arcolab Gets USFDA Approval For Cisplatin

Bangalore-based pharma company, Strides Arcolab, has continued increasing its generic pipeline for the US market by yet another approval from the USFDA. Yesterday it received USFDA approval for chemotherapy drug Cisplatin Injection in the formulation of 1 mg/ml. The drug will be available in 50 ml and 100 ml multiple dose vials.

Cisplatin is a chemotherapy drug which is used in the treatment of different types of cancers. The company has reported that Cisplatin is currently facing drug shortage in the US market and hence the approval has come at the right time in the market. According to IMS, Cisplatin has total US sales of USD 10 million. The company expects to launch Cisplatin in the US very soon.

In 2012 the company has so far received a total of four product approvals which have a combined market size of USD 367.3 million. That apart, in the month of December the company also received USFDA approval for its sterile products’ division in Bangalore. In February Strides Arcolab received USFDA approval for its Brazilian sterile facility. 

In January the company sold its divisions in Australia and Southeast Asia to Watson Pharmaceuticals for an amount of USD 393 million (about Rs 2,000 crore). The company will use USD 250 million (about 1,275 crore) to repay its debts of which USD 120 million will be used to redeem the FCCBs due in June 2012. With that we believe its return ratios will improve. Besides, in the current scenario of rupee depreciation, the company will be able to offload a major burden of its debt which will increase the shareholders’ value.

Strides Arcolab is expected to present its March quarter results in the next week. We expect a very nominal impact of its discontinued Australasia business on earnings. The product launches that the company has done in the past have been fruitful due to which it reported a good set of numbers in the last quarter. Besides, with the cash generated from the sale of the Australasia business will also increase its other income. The stock on an YTD basis has surged by 65 per cent and we believe that it has now factored its March quarter earnings as well. One can however look to invest in the stock which we believe will gain on its products’ approvals mainly in the oncology segment in the future.