e-mail submissions to [email protected]—Björn Dahlöf, in the LIFE study,1Lars Lindholm and colleagues “to share exciting news” and remindme of the results of the LIFE study. cardiologists received the same letter. Iporosity of liver sinusoids in relation toloss of integrity of the endothelial lining,Dahlöf B, Devereux RB, Kjeldsen SE, et al. Cardiovascular morbidity and
16 February 2012
Sushant Dalmia, CFA
Wyeth claims USD960mn damages for Protonix
Sun Pharma has announced that in the on-going patent litigation on generic Protonix in the US district court of
New Jersey, Wyeth (Pfizer) has submitted expert reports claiming damages to the tune of USD960mn (Rs42/share)
from Sun Pharma. Wyeth has now claimed USD2.1bn from Teva and USD960mn from Sun Pharma for the at-risk
launch of generic Protonix. Thus, Wyeth in totality is claiming USD3bn for the launch. Our assessment would be
that the claims from Wyeth are on the higher side on back of 1) Protonix was a USD2bn brand for Wyeth before the
launch of generic. 2) Wyeth generated revenues of USD806mn (including AG contribution) from Protonix in CY2008
post the at-risk launch by Teva and Sun. 3) Sun Pharma launched the drug post the launch by Teva and AG. 4) Sun
Pharma could have made profits to the tune of USD240-280mn from the launch.
We expect that the claims could be in the range of USD300-500mn (Rs13-22/share), if Sun Pharma is unable to get
a favourable judgment on the patent litigation. Sun Pharma has a strong balance sheet (cash of USD1bn) and the
generic Protonix trial could be a long time driven process, however we expect this to be a sentimental negative
for the stock. The stock is up ~8% in last one month, and is trading at 25.9x FY12E and 23.2x FY13E earnings.
We maintain REDUCE on the stock with a Target Price of Rs534 (22x one year forward earnings) on back of rich
Protonix Litigation- A run through: In June 2007, Wyeth filed a motion in the US Court seeking preliminary injunction
against both Teva and Sun preventing them from launching the generic version of Protonix pending Court’s final decision in
patent litigation. In September 2007, the court denied the motion, however the court did not conclude that the patent was
invalid. Teva launched at-risk the generic version of Protonix in Dec. 2007, post the approval on its ANDA in Aug 2007.
Following this, Watson launched Authorised Generic (AG) in Jan 2008. Subsequently, Sun Pharma also launched the product
in Jan 2008. In July 2010, the US district court upheld the jury verdict there by concluding that the Protonix patent is not
invalid. As a result, Sun Pharma stopped the shipment of the product.
Sun Pharma’s plan of action: Sun Pharma has indicated that the claim by Wyeth is overstated and continues to believe
that Protonix patent is invalid. The US district court has upheld the patent as valid and now is proceeding to ascertain the
damages. Sun Pharma would submit its report on the amount of damages. Post the decision by the US district court, Sun
PINC QUICK BITE Pharma has a right to appeal in higher court on patent validity and the amount of damages.
Our take: Wyeth has now claimed USD2.1bn from Teva and USD960mn from Sun Pharma for the at-risk launch of generic
Protonix. Thus, Wyeth in totality is claiming USD3bn for the launch. Our assessment would be that the claims from Sun
Pharma are on the higher side on back of 1) Protonix was an USD2bn brand for Wyeth before the launch of generic. 2) Wyeth
generated USD 806mn (including AG contribution) from Protonix in CY2008 post the at-risk launch by Teva and Sun. 3) Sun
Pharma launched the drug post the launch by Teva and AG. 4) Sun Pharma could have made profits to the tune of USD240-
280mn from the launch. We expect claims could be in range of USD300-500mn (Rs13-22/ share), if Sun Pharma is unable to
get a favorable judgment on the patent litigation.
KEY FINANCIALS (CONSOLIDATED)
For rating objective and disclaimer, please refer to last page of the report PINC Research reports are also available on Reuters, Thomson Publishers and Bloomberg PINV <GO> RESEARCH
OUTLOOK AND VALUATIONS:
Sun Pharma has a strong balance sheet (cash of USD1bn) and the generic Protonix trialcould be a long time driven process, however we expect this to be a sentimental negativefor the stock. The stock is up ~8% in last one month, and is trading at 25.9x FY12E and23.2x FY13E earnings. We maintain ‘REDUCE’ on the stock with a target price of Rs534(22x one year forward earnings) on back of rich valuations. Exhibit: Key events pertaining to Protonix
The US court denied the motion filed by Wyeth seeking preliminary injunction againstTeva and Sun Pharma Teva launched at-risk the generic version of Protonix Watson launched the Authorised Generic (AG). Post that Sun Pharma also launchedthe product In a separate Para IV litigation, the jury in New Jersey held that the patent was notinvalid.
The US Court ruled against the arguments put forth by Sun Pharma regarding theobviousness type double patenting defenses and upheld the patent.
The Company put all its shipments of the product on hold, re-evaluating the marketingof the product as a part of its at-risk launch of Protonix.
Wyeth claims USD960mn damages from Sun Pharma RESEARCH
Cash Flow Statement
Cash flow from oper (a)
Cash flow from inv.(b)
Free cash flow (a+b)
Reported EPS (Rs)
Cash flow from fin. (c)
Recurring EPS (Rs)
Net chg in cash (a+b+c)
1-Year forward P/E Band
Head of Research, Auto, Cement
Construction, Power, Capital Goods Rating Objective
M.Cap > USD1bn
M.Cap <= USD1bn
More than 15
More than 20
(-)5 to +5
Less than 0
Member : Bombay Stock Exchange & National Stock Exchange of India Ltd. : Sebi Reg No: INB 010989331. Clearing No : 2111216, Maker Chambers V, Nariman Point, Mumbai - 400 021; Tel.: 91-22-66186633/6400 Fax : 91-22-22049195 Disclaimer: This document has been prepared by the Research Desk of M/s Infinity.com Financial Securities Ltd. (PINC) and is meant for use of therecipient only and is not for public circulation. Each recipient of this document should make such investigations as it deems necessary to arrive atan independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), andshould consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not besuitable for all investorsThe information contained herein is obtained and collated from sources believed reliable and PINC has not independently verified all theinformation given in this document. Accordingly, no representation or warranty, express or implied, is made as to the accuracy, completeness orfairness of the information and opinions contained in this document.
The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated asendorsement of the views expressed in the report. The opinion expressed or estimates made are as per the best judgement as applicable at thatpoint of time and PINC reserves the right to make modifications and alternations to this statement as may be required from time to time without anyprior approvalPINC, its affiliates, their directors, employees and their dependant family members may from time to time, effect or have effected an own accounttransaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investmentbanking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entitiesfunctions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the documentThis report has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysisof PINC. The views expressed are those of analyst and the PINC may or may not subscribe to all the views expressed thereinThis document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, toany other person or published, copied, in whole or in part, for any purpose. Neither this document nor any copy of it may be taken or transmitted intothe United State (to U.S.Persons), Canada, or Japan or distributed, directly or indirectly, in the United States or Canada or distributed or redistributedin Japan or to any resident thereof. The distribution of this document in other jurisdictions may be restricted by law, and persons into whosepossession this document comes should inform themselves about, and observe, any such restrictionsNeither PINC, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, specialor consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
Copyright in this document vests exclusively with PINC and this document is not to be reported or circulated or copied or made available to others.
Our reports are also available on Reuters, Thomson Publishers and Bloomberg PINV <GO>
ANNE MILLER THE CREATIVITY PARTNERSHIP How canan R&Dgroup getothersinterested Research and development creates value, but only when its ideas are commercialised. However, R&D departments often find it in its ideas? difficult to get even the best ideas adopted by others, and hence this value is wasted. Anne Miller discusses the reasons for this, and giv