Shrinking Remdesivir sales to impact Cipla, Dr Reddy’s: Sanford Bernstein

“Remdesivir will be an important opportunity for companies like Cipla, DRL,” said Nithya Balasubramanian, Director of Sanford Bernstein in an interview with CNBC-TV18.

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She expects to see lesser sales of Remdesivir and Favipiravir. “There are five-six firms, which received the licence from Gilead to produce Remdesivir.

"However, I do believe that the opportunity size is likely to materially shrink compared to how much they produce and they were able to sell during the second wave of COVID-19 in the last quarter. From there, I am sure you are likely to see lesser sales of Remdesivir, Favipiravir and quite a few antibiotics as well which saw quite a lot of pick up,” she said.

The sales of Remdesivir depends on the possibility and extent of India getting impacted by the third wave of COVID-19.

“In my own personal view, we are unlikely to see a very large third wave of COVID-19, which means that you will continue to see the diminishing contribution of COVID therapeutics for most of the names that I mentioned now,” she added.

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Sanford Bernstein has come up with a report comparing Aurobindo Pharma’s injectable business to Gland Pharma’s injectable business and the kind of valuation multiple a separate demerged entity could come at.

“We have highlighted how a B2C business like Aurobindo Pharma’s is very different from a B2B business like Gland Pharma. They have heightened pricing risk, they have base erosion risk, the plant utilisation levels will be slightly lower than a B2B company like Gland, so we think it should trade at a discount,” she explained.