Lupin's Generic Kidney-Function-Decline Drug Launch 'At Risk', Says Citi; Maintains 'Sell'

Lupin's decision to proceed with the launch of generic Jynarque tablets used to slow kidney function decline in adults has been classified as an "at risk" launch by Citi Research. This means Lupin might face lower market share and potential delays due to the injunction or restraining order by Otsuka Pharmaceutical against a district court ruling that previously favoured Lupin in the patent dispute over generic Jynarque.

Jynarque is used to slow the progression of kidney function decline in adults who are at high risk for rapidly advancing autosomal dominant polycystic kidney disease.

The appeal introduces potential complications for Lupin's planned launch of the generic version scheduled for April 2025, placing it in a precarious position.

On July 31, the district court's decision appeared to clear the path for Lupin, as it invalidated one of Otsuka’s patents and deemed another valid but not infringed by Lupin's proposed generic.

This ruling initially allowed Lupin to move forward with a 180-day exclusivity period for its generic Jynarque. However, Otsuka's new appeal introduces fresh uncertainty.

The patents involved are process patents, which are often less critical than compound patents and have already expired for other Tolvaptan brands. Despite this, past cases such as Copaxone and Suboxone demonstrate that innovators can sometimes delay generics through prolonged litigation.

Analysts at Citi Research maintain a 'sell' rating over the company as besides the immediate issue with Jynarque, Lupin's broader pipeline raises concerns about long-term earnings sustainability.

With Jynarque expected to contribute approximately 30% to the company's earnings per share for fiscal 2026, a successful appeal by Otsuka could significantly impact Lupin’s financial projections.

The company's pipeline lacks major products that could counterbalance a potential decline in Jynarque's contribution.

Shares of the company fell as much as 3.14% to Rs 2,186 apiece, the lowest level since Aug. 29, 2024. The stock pared losses to trade 1.4% lower at Rs 2,227.30 per share as of 12:11 pm. This compares to a 0.06% decline in the NSE Nifty 50 index.

The stock has risen 68.56% year-to-date. Total traded volume so far in the day stood at 0.38 times its 30-day average. The relative strength index was at 67.8.

Out of 35 analysts tracking the company, 16 maintain a 'buy' rating, 10 recommend a 'hold,' and nine suggest a 'sell,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 10%.