discussion on fda approval delays and reddys

From:

http://www.msnmoneyalerts.com/uncategorized/find-out-elara-caps-view-on-glenmark-cipla-dr-reddys/

Q: On Dr. Reddy's, the numbers came out way ahead of estimates. For the next financial year, what kind of numbers do you expect and what would be the rating on the stock?

A: With the kind of justified valuation, the company should deserve a price of around Rs 1,800 of which we have a target of Rs 1,810. The major drag in the company is that the company has delayed approvals. So even if some of the limited competition enters late, your commercial viability or commercial attractiveness comes down which has been reflecting in the depressing price of the counter for the last two months. That's one of the biggest problems.

I believe the reason for this is from their Hyderabad plant which has been under the US FDA scanner as well. Along with some of the unfortunate events which happened last year. Put together, this might have forced them to get into a delayed mode of the approval from the US FDA.

Otherwise, I don't find any problem in the company's fundamentals. They are pretty strong; they have a good pipeline with a lot of limited competition opportunity. The only drag is the kind of delay happening in some of the drugs like fondaparinux where even the company management or the partner doesn't know when it will come. So this kind of USD 200-300 million limited opportunity definitely will augur well for the company.