Stock Views on GLAXOSMITHKLINE PHARMA, LUPIN

HSBC on LUPIN

HSBC maintain Overweight rating on Lupin and a price target of Rs 560. Lupin has filed para IV patent infringement suits against Mylan and Apotex, which have filed ANDAs to market generic versions of Antara. Antara is a micronised fenofibrate used in the treatment of hypercholesterolemia and is available in two dosage strengths – 43mg and 130mg. Lupin subsequently sold its ANDA rights to Dr Reddy's, which is now the first-to-file on the generic version. Dr Reddy's has the right to launch the product before patent expiry. It appears the Paddock Antara infringement case is being scheduled for claim construction and a Markman ruling in the second half of this year, with a final pre-trial conference in November. The likely near-term impact on the brand could be from generic TriCor, which, following Teva's settlement with Abbott, could come in FY12. Recent prescription trends indicate stable uptake for Antara, which has a 2.5% market share in the branded fenofibrate market in the US. HSBC continues to forecast 30% CAGR growth in generics in the US for the company.

CITIGROUP on GLAXOSMITHKLINE PHARMA

Citigroup maintains Sell rating on Glaxosmithklilne Pharma with a target price of 2100 as they roll forward to 25xJune'12E earnings. The business is robust and Citigroup see steady growth going forward but see limited upside at 23xCY12E EPS. Citigroup expect sales to grow at least in line with the market, as new product launches – proprietary/ inlicensed products, vaccines & branded generics – gain traction & contribute a larger share of the company's revenues. Share of new launches stood at 7% of sales in CY10 and it has been able to gain share even when it has been late to market. Citigroup believe GSK's strong brands, healthy relationship with doctors and recent field force expansion would sustain these trends. GSK Pharma has cash and cash equivalents worth Rs 21bn on its balance sheet. Management has indicated several times in the past that it is keen to acquire good products / brands if valuations are reasonable. However, given high multiples involved in recent transactions in the Indian market, Citigroup see this as a remote possibility in the medium term.