(RDY) Dr. Reddy’s Laboratories Launches Generic Levaquin

Dr. Reddy’s Laboratories (RDY) recently announced the launch of its generic version of Johnson & Johnson’s (JNJ) antibiotic drug, Levaquin, in the US. Data from IMS Health reveal that the branded product recorded sales of $1.1 billion in the trailing twelve months ending March 2011.

Only recently Dr. Reddy’s announced the launch of three other generic products in the US. The company launched the generic versions of Pfizer Inc.’s (PFE) anti-depressant, Effexor XR, Eisai Co. Ltd.’s Alzheimer’s treatment, Aricept, and Novartis AG’s (NVS) breast cancer treatment, Femara.

We believe that the launches of all these generic drugs will bring in additional revenues for Dr. Reddy’s Global Generics segment, which recorded sales of $1.2 billion in fiscal 2011 (ending March 2011), reflecting a sharp year-over-year increase of 10%.

Interestingly we note that while generics revenues increased 18% in North America, 19% in Russia and other CIS (Commonwealth of Independent States) markets, and 15% in India, these deteriorated 13% in Europe, in fiscal 2011. In the European market, Germany was worst hit, with a 25% drop (due to a decline in the Euro currency), partly mitigated by the rest of Europe experiencing a 27% rise.

During fiscal 2011, Dr. Reddy’s launched 135 new generic products, filed 107 new product registrations, and 56 drug master files (DMF) globally. At the end of fiscal 2011, total ANDAs awaiting FDA approval were 75, of which 37 were paragraph IV filings and 10 were first-to-file.

Our Take

Reddy’s retains a Zacks #2 Rank (short-term Buy rating). We believe the company is in a strong position to benefit from the huge potential in the US generics market, as many drugs are slated to lose patent exclusivity in the coming years.

Longer term, we have a Neutral recommendation on Dr. Reddy’s.

JOHNSON & JOHNS (JNJ): Free Stock Analysis Report

NOVARTIS AG-ADR (NVS): Free Stock Analysis Report

PFIZER INC (PFE): Free Stock Analysis Report

DOCTOR REDDYS (RDY): Free Stock Analysis Report

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