MOSL: DR REDDY’S LABS (Neutral)-Suboxone litigation in favor of DRRD-US FDA approval key

DR REDDY’S LABS: Suboxone litigation in favor of DRRD; US FDA approval key

(DRRD IN, Mkt Cap USD7.8b, CMP INR2217, TP INR2500, 13% Upside, Neutral)

The District Court of Delaware (US) has ruled in favor of Dr. Reddy’s (DRRD) in the Suboxone litigation. The court found the patents ‘150, ‘514, ‘497 valid and non-infringing. According to IMS, secondary sales for Suboxone films stood at USD1.7b (primary: USD850m) in CY16. In August 2016, DRRD had acquired eight ANDAs, including gSuboxone, from Teva Pharmaceutical. Suboxone Film is indicated for the treatment of opioid dependence.

Could be limited competition product in medium term: As of now, there only five generic players with whom patent litigation is ongoing (DRRD, Actavis, Par Pharmaceuticals, Mylan and Alvogen). According to the June 2016 ruling, Par and Actavis are infringing patent ‘514 (valid until 2024) – both players will approach the US Court of Appeals for the Federal Circuit. Hearing on litigation against Alvogen and Mylan will start from 25-Sep 2017. Indivior expects the ruling in this case to come by 1QCY18 (by this time, the 30-month stay on Alvogen/Mylan’s products will also be over). Given that the patent is still valid, any new player will have to go through a 30-month stay for FDA approval.

Key to watch how sales shifts to buprenorphine monthly depot: On 31 July 2017, the USFDA accepted Indivior’s new drug application (NDA) for buprenorphine monthly depot (RBP-6000). The FDA has set a PDUFA target action date of 30 November 2017, and Indivior expects launch of RBP-6000 by 1QCY18 (expected top-line of USD1b). It would be key to watch that how much sales shift happens from Suboxone films to RBP-6000. Notably, even though Suboxone tablets became generic (in 2013), Suboxone films continued to maintain ~60-61% market share in buprenorphine treatment for opioid dependence in the US. Given that RBP-6000 depot will have monthly dosage v/s daily for films, Indivior expects this to be a superior product.