The share price of Dr Reddy's Laboratories rallied over 9 percent to a 52-week high on Friday after the company settled patent litigation for Revlimid with Celgene, a Bristol Myers Squibb company, which allowed the firm to sell Lenalidomide in the US after March 2022.

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The share price gained as much as 9.86 percent to hit a 52-week high of Rs 5,302.85 apiece on the BSE. At 12:50 pm, the shares were trading 8.77 percent higher at Rs 5,250.00 apiece as against a 0.13 percent gain in the benchmark Sensex.

In a release issued to exchanges on Thursday, the company said that in the settlement of all outstanding claims in the litigation, Celegene has agreed to provide Dr Reddy’s with a licence to sell volume-limited amounts of generic Lenalidomide capsules in the US beginning on a confidential date after March 2022 subject to regulatory approval.

The agreed-upon percentages are confidential, it added.

Dr Reddy’s is also licensed to sell Lenalidomide capsules in the US without volume limitation beginning on January 31, 2026, the release said.

Global brokerage Credit Suisse said that the Revlimid generic cashflows should be significant for the company (over $700 million). The brokerage maintained an 'Outperform' rating and raised the target price to Rs 5,750 from Rs 5,100 per share earlier.

Credit Suisse noted that Dr Reddy’s Labs is one of the two players that can market Avigan in the US for COVID treatment. The company can increase share in Suboxone with innovator guiding for lower volume, it said.

ICICI Securities believes this development provides certainty to launch and a material earnings accretion over FY23-FY26. It estimates Dr Reddy’s to generate cumulative sales and PAT of $2.5 billion and $1.6 billion respectively over this shared exclusivity period.

“We value this opportunity at Rs 514/share for Dr Reddy’s Labs considering annual market size of $8 billion and gradual market share increase to 18 percent in FY26,” ICICI Securities said.

The brokerage raised FY23 revenue/EPS estimates by 7.8/38.0 percent to factor in Revlimid launch. It maintained 'Add' rating and raised the target price to Rs 5,214 from Rs 4,713 per share earlier.

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First Published:Sept 18, 2020 10:30 AM IST