genglob magazine

Natco Pharma is back in limelight after the Indian Patents Appellate Board upheld the decision of awarding compulsory license to the drug firm to manufacture Bayer’s cancer drug Nexavar at a significantly reduced price.

The Hyderabad-based drug company is engaged in formulations, active pharmaceutical ingredients ( APIs) and owns a retail pharmacy business in the US. It earns majority of its revenues from oncology drugs. Following the Indian Patent office awarding compulsory license to the company, it has been selling the generic version of Bayer’s drug Nexavar, meant for treating a rare liver and kidney cancer, since April last year. In the months from April to December last year, the company sold the drug worth Rs 14 crore and expects the revenues from this product to range between Rs 15 and 20 crore in the coming years. While the company does not earned significantly from the drug, it achieved the breakthrough of winning a compulsory license for manufacturing the generic version of a life-saving drug – opening inroads for cheaper drugs in the country.

he company’s consolidated net sales for the last four trailing quarters have grown 28 per cent to over Rs 600 crore. Its operating profit has doubled to over Rs 130 crore during the same period. While its API and retail pharmacy business are growing well, its formulations business has got impacted on account of slowdown in the domestic pharma market. With new product launches in the US market, its revenues from the formulations business are likely to pick up. According to data from Bloomberg, out of the total analyst recommendations, 5 are buy recommendations and one is a sell. The average target price is Rs 530 – 22 per cent more from the current market price of the stock.