RANBAXY – Diovan exclusivity – safely “parked” by Ranbaxy

Date: 2015-07

“Ranbaxy has so far not been able to launch generic Diovan (valsartan) in the US despite the scheduled date of launching under 180-day exclusivity having already passed. Ranbaxy tacitly maintains that the 180-day exclusivity will remain “parked” until they receive the approval without risking forfeiture. Our analysis too concludes that neither Ranbaxy’s exclusivity has the risk of forfeiture, nor does its exclusivity stand triggered on 21 Sept 2012 (scheduled date of launch).
This is because as per the Post MMA Hatch-Waxman Act, 180-exclusivity can be forfeited only if any of the 3 events have occurred, i.e. (1) a final court decision in favor of generics or (2) a settlement on patent litigation or (3) patent delisting. Diovan patent litigation was never contested by the innovator and thus none of the 3 events have occurred making the forfeiture provision non-applicable in this case.
We do not think that Mylan’s litigation on FDA demanding exclusivity forfeiture based on delay in tentative approval may succeed as the delay was due to change in some requirements by USFDA for approval after the ANDA was filed. We thus do not see any risk of loss of cashflows for Ranbaxy due to delay in securing the approval. We retain our Market Perform rating for Ranbaxy with a target price of `504.”


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