Pharma Global, Research Delta Advisors

Nimish Mehta

Pharma Global

Research Delta Advisors

Research Delta is a SEBI registered investment adviser focused on the pharmaceutical sector with a passion to finding strategic opportunities / unique business models and valuing them. We do this by coupling our macro understanding of key trends in the pharmaceutical industry with bottoms-up analysis to help serve our clients in taking crucial strategic and investment decision. We work closely with various stakeholders of this decision making process by becoming an extension of their thought process and by bringing in a worldwide perspective of opportunities and challenges. 

Thematic (Sector/Industry)

United states Pharmaceuticals, biotechnology and life sciences / Thematic (Sector/Industry)

<p>Post the recall of Valsartan formulations (generics of Diovan) by various generics in the US, a shortage was created resulting in significant price hike of Valsartan (as high as 300% as per some reports). The recall was initiated by the USFDA in June 2018 for those formulations manufactured from APIs having a toxic impurity known as NDMA. Companies like <a href="https://www.smartkarma.com/entities/11196" target="_blank" data-smartkarma-citation="entities:11196:1">Alembic Pharmaceuticals (ALPM IN)</a> have benefitted hugely by the price increase – which was otherwise a commoditized generic in the market.  </p><p>As we keep an eye of this opportunity, we now see first signs of restoration of normalcy in the market with Camber pharma (currently recalled the drug) hinting to come back by October with the original API (without NDMA). Along with that we see <a href="https://www.smartkarma.com/entities/27161" target="_blank" data-smartkarma-citation="entities:27161:1">Amneal Pharmaceuticals Inc (AMRX US)</a> and Ohm Labs ( <a href="https://www.smartkarma.com/entities/98" target="_blank" data-smartkarma-citation="entities:98:1">Sun Pharmaceutical Indus (SUNP IN)</a> (currently not supplying Valsartan to US), planning to supply in September 2018 to get a share of this opportunity. Finally our talk with <a href="https://www.smartkarma.com/entities/868" target="_blank" data-smartkarma-citation="entities:868:1">Teva Pharmaceutical Sp Adr (TEVA US)</a> suggests that they too may come back in ‘some time’. We believe all the other companies that had to recall the product due to the same reason may also be back latest by Nov 2018. Thus there are chances that Valsartan API &amp; hence the formulation shortage will be resolved much sooner than expected.</p>

Post the recall of Valsartan formulations (generics of Diovan) by various generics in the US, a shortage was created resulting in significant price hike of Valsartan (as high as 300% as per some reports). The recall was initiated by the USFDA in June 2018 for those formulations manufactured from APIs having a toxic impurity known as NDMA. Companies like Alembic Pharmaceuticals (ALPM IN) have benefitted hugely by the price increase – which was otherwise a commoditized generic in the market.  As we keep an eye of this opportunity, we now see first signs of restoration of normalcy in the market with Camber pharma (currently recalled the drug) hinting to come back by October with the original API (without NDMA). Along with that we see Amneal Pharmaceuticals Inc (AMRX US) and Ohm Labs ( Sun Pharmaceutical Indus (SUNP IN) (currently not supplying Valsartan to US), planning to supply in September 2018 to get a share of this opportunity. Finally our talk with Teva Pharmaceutical Sp Adr (TEVA US) suggests that they too may come back in ‘some time’. We believe all the other companies that had to recall the product due to the same reason may also be back latest by Nov 2018. Thus there are chances that Valsartan API &amp; hence the formulation shortage will be resolved much sooner than expected.

Zhejiang Huahai Pharmaceutical Co, Ltd. (600521 CH)

Valsartan Recall in US – Opportunity Coming To End