On Thursday, Citi reaffirmed its Buy rating and INR1,800.00 price target for Cipla (NS:CIPL) Ltd. (CIPLA:IN) stock, following the pharmaceutical company's legal action in the United States. Cipla, in partnership with Orbicular Pharma, has sought a declaratory judgment of non-infringement on two patents related to the drug Gattex (Teduglutide), indicating proactive measures to address patent concerns ahead of potential final approval and product launch.
The companies have jointly filed an Abbreviated New Drug Application (ANDA) for Gattex in December 2023, signaling their anticipation of a tentative approval in the near future. The move to obtain a court declaration is seen as a strategic step to mitigate patent infringement risks before the anticipated launch of their generic version of Gattex, which might occur in the fiscal years 2026 or 2027.
Gattex, which is used in the treatment of short bowel syndrome, currently generates around $700 million in annual sales in the U.S. market. Citi's analysis suggests that if Cipla receives approval for its generic version, the product could potentially bring in annual revenues of $80-140 million for the company. The revenue projections for the generic Gattex are comparable to those of Lanreotide, another of Cipla's products.
The absence of patent litigation from the innovator of Gattex may be a favorable sign for Cipla and Orbicular Pharma. However, the complexity of the product, being a glucagon-like peptide-2 (GLP-2) analog, means that regulatory approval will be a critical factor for the companies' success in bringing the generic version to market.
Citi maintains a positive outlook on Cipla's shares, emphasizing the potential revenue boost from the generic Gattex as a key factor in sustaining the Buy rating. The firm's stance remains unchanged as Cipla navigates the patent landscape and seeks regulatory clearance for its product.
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