Maintaining their bull run, shares of Zydus Lifesciences recorded their new 52-week high of ₹458.7 apiece on Tuesday, surpassing their previous high of ₹445.25.
The stock began the trade lower at ₹443.50 apiece as against a previous close of ₹444.05, but it later gained momentum and finished the day at ₹457.35, up by ₹13.30 or 3 percent.
During the trade, the stock recorded a volume of 3.4 million shares both on NSE and BSE, compared to its weekly average volume of 1.5 million shares.
The stock lost 29.35 percent of its value between July and December of last year, gradually declining from ₹570.45 to ₹403. But in 2023, it got off to a strong start, generating a return of almost 8 percent so far in the current month, with the majority of gains occurring in the last 3 trading days at 6.18 percent.
The stock gained traction after the company launched Topiramate extended-release capsules in the American market.
The company had earlier received final approval from the US Food and Drug Administration (USFDA) to market the product in strengths of USP 25 mg, 50 mg, and 100 mg, Zydus Lifesciences said in a statement.
Zydus is the first company to receive final approval and launch the medication in the above-mentioned strengths, it added.
Earlier, it received final approval from the US health regulator to market its generic version of Triazolam tablets, used on a short-term basis to treat insomnia. Triazolam tablets had annual sales of $11.7 million in the United States for the 12-month period ending September 2022, according to IQVIA data.
In its recent note, Ashika Stock Broking stated that the new product launches in the US will benefit the company, as US market accounts for nearly 39 percent of its total revenue, making it an important market for Zydus Lifesciences.
During 1HFY23, US sales grew by 11 percent YoY to ₹3,300 crore as new launches gained traction despite pricing pressure in the business. The company has a healthy product pipeline in the US. It has filled 11 Abbreviated New Drug Applications (ANDAs) and launched 18 products, including Revlimid in 1HFY23. As of 1HFY23, it had regulatory clearance for the Moraiya facility from the USFDA, said the brokerage.
During 2QFY23, the company launched 10 new products in the US, including Revlimid, which aided the growth momentum. The sale of Revlimid in the US during 2QFY23 stood at USD 24 million, which is expected to increase in subsequent quarters.
Zydus Lifesciences has a robust pipeline with 105 ANDAs pending approvals. The management guided for about 30 ANDA filings and launches each year while maintaining R&D spending at around 7 percent of revenues in FY23, it noted.
The return of the flu season in India and the US, and COVID-19 in China sparked the demand for anti-infectives, antibiotics and analgesics drugs. Zydus Lifesciences is well-positioned with a good sales mix.
Zydus generates 13 percent of its revenue from anti-infectives, 10 percent from respiratory drugs, and 8 percent from analgesics, giving it a strong presence in all major flu therapies, the brokerage added.
Ashika Stock Broking has a "buy" call on the stock with a 12-month target price of ₹480 apiece.
Meanwhile, any inspection by the US FDA of its plants and any import alert could have a negative bearing on its business growth, and higher price erosion and competition in the US generic drug market could hurt its margins going forward, which act as key downside risks for the stock, the brokerage stated.
Zydus Lifesciences is the fourth largest pharma company in India, with 14 brands among the top 300 pharma brands in India and 9 with ₹100 crore or more in sales.
The US is the largest contributor to its revenue, accounting for 39 percent of revenue, followed by India at 32 percent.
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