US court prohibits Dr Reddy’s from selling Opioid treatment drug

US’ New Jersey district court granted a preliminary injunction against Dr Reddy’s.

Jul 14, 2018 05:07 IST India Infoline News Service

Dr Reddy Lab
In bad news for Indian pharma giant Dr Reddy’s, a US federal judge has blocked the multi-national from selling a generic version of Indivior PLC’s opioid treatment Suboxone film. While this is big setback for the Indian drumaker, Dr. Reddy's Lab has said that it disagrees with the court's decision, and will vigorously appeal against it.

US’ New Jersey district court granted a preliminary injunction against Dr Reddy’s. Thus, this prevents it from selling or exporting the drug to the US pending the outcome of the litigation, the reports added. The court has also ordered the parties to submit a final proposed injunction order on July 16.

Suboxone, one of the key drugs in Dr Reddy’s product portfolio, is used to treat addiction to heroin and prescription painkillers. Reportedly, Dr Reddy’s had launched a generic version of Indivior’s popular opioid treatment drug in the last month; however, the US court had temporarily prohibited Dr. Reddy's from selling this drug in the US. 

Now, this will lead to a cut in Dr. Reddy's FY19E/FY20E earning estimates. Note that the company has already received a setback on gCopaxone as the launch of this drug will happen in H1FY20E. In absence of a major drug launch, earnings will remain weak in our opinion.

Incidentally, in anticipation of a positive outcome in the US court and Indivior's revised CY18 guidance, Dr Reddys’ shares had surged last week.

Meanwhile, the UK-headquartered Indivior is listed on the London Stock Exchange. Its shares fell over 32% on Wednesday morning after it announced that Dr Reddy’s entry in the addiction treatment sector could be a threat. It indicated that the impact on revenue could be $25mn for FY2018, media reports added.

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