Biocon’s shares rose 5.36% on BSE on Thursday, a move attributed to the company’s announcement that it is launching Cimivir-L, a drug to treat hepatitis-C. The drug is for the treatment of hepatitis-C genotype 1 patients who represent one-fourth of 18 million such patients in India, according to a company statement.
Biocon and a clutch of other Indian pharmaceutical companies have been licensed by the drug’s innovator, Gilead Sciences Inc., to sell a few of its hepatitis-C drugs in India. On 15 December, Natco Pharma Ltd announced the launch of the same drug, a version of Gilead’s Harvoni. Natco’s shares did not react the way Biocon’s did, although the former’s shares have gained 4.7% till date.
The Indian companies plan to sell these medicines at lower prices than the innovator and cover a larger patient base. Natco Pharma, for instance, said it will sell its version of Harvoni at Rs.5,000 for a bottle of 28 tablets. For a 12-week dose, it works out to Rs.15,000. Gilead’s website mentions that it has priced Harvoni for developing countries at $400 a bottle, or Rs.26,500 at current exchange rates. Biocon has said it will also launch the drug at a fraction of the international price.
India’s position as a country with one of the largest number of hepatitis-C patients makes it an attractive market. How much of this target segment actually gets on to these new drugs is what will determine the extent to which the Indian permit holders benefit. Also, competition among them to grab a bigger slice of this market is another risk to watch out for.
One development that continues to benefit Biocon is the listing of Syngene International Ltd, which netted it Rs.550 crore in funds. Also, the share has gained 58% from its issue price. Since Biocon continues to own a majority stake, it benefits as well. Biocon’s September quarter did see somewhat slower sales growth, partly due to capacity constraints and due to its focus on shifting to more profitable products.
The December quarter should provide an update on how these factors are playing out. The performance of its existing business and that of Syngene should drive stock performance in the near to medium term, while its research programmes are likely to play a bigger role in the longer run.