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Albany Molecular Research Inc. Message Board

  • dougdougxyz dougdougxyz Jan 29, 2011 11:42 AM Flag

    any thoughts on the Allegra news?

    seems to be factored in here, that ruling was issued on January 14. Sounds like just the appeal that was filed. Also, does anyone know what consequence OTC Allegra in March has on the finances of AMRI? seems as if it would be a positive for AMRI as sales would increase. thanks.

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    • I would think this is very bad news. AMRI only had a deal with Teva/Barr for any generic related royalties; not Dr Reddys. Not sure they get anything now in terms of sales via Reddys. Sales via Sanofi will fall rapidly now and that is what the royalty is based off of (which is something like $25-28 million per year). That is going to dent earnings a great deal. Furthermore Reddy's is going after Sanofi and AMRI for $40 million in damages. Reddy's is the only company now cleared to sell generic Allegra and they have annouced publicly that it will be a positive to their earnings. This indicates they will go after the market in a big way. This is bad news all the way around. With the royalty stream reduced overall net income (and earnings) will take a cut. The patent/deal was cut in 1995 with Sanofi so this day is long coming and the company had plenty of time to diversify income streams but has failed to do so.

      • 1 Reply to bulachmingo
      • bulachmingo,

        Thanks for sharing. You make a very good case. However, I need to comment on this passage:

        "Reddy's is the only company now cleared to sell generic Allegra and they have announced publicly that it will be a positive to their earnings."

        Although that is true, it’s slightly misleading. sanofi-aventis has approval to sell Allegra OTC. According to the filing:

        "On January 25, 2011, sanofi-aventis and its U.S. Consumer Healthcare Division, Chattem, Inc., announced that the U.S. Food and Drug Administration (FDA) approved the Allegra (fexofenadine HCl) family of allergy medication products for over-the counter (OTC) use."

        I doubt that Dr Reddy’s will pay any royalties for Allegra, so now that royalty income could be dented. I guess the question is: how big is the OTC market for allergy drugs? This could mean the difference between becoming a $3 stock or a $7 stock. There’s Sudafed, Claritin, Zyrtec, etc. Let's hear what management has to say when they release earnings. I find it interesting that management filed with the SEC on a Friday and didn't issue a press release. Management continues to go out of its way to be uninformative, which does not inspire confidence.

    • dougdougxyz -

      You posed an excellent question. In my amateur opinion, I immediately see two sides to this story.

      *** The glass is half full: It's great that AMRI has approval to launch an OTC version of Allegra D24. This new market could generate more revenues.

      *** The glass is half empty: Apparently, AMRI has lost its patent infringement lawsuit against Dr Reddy's. AMRI might have to pay money to Dr Reddy's. Also, the AMRI/Sanofi-Aventis OTC version of Allegra D24 will be competing versus Dr Reddy's. At first glance Dr Reddy's has more experience in this area. Therefore, this could have a negative impact on revenues.

      It would be nice to hear from some of the non-insiders and impartial people who post here, such as: trading_pharma; nutley340; knowtain; poorlake; bulachmingo; gt9486a; etc

 
AMRI
20.02-0.22(-1.09%)3:59 PMEDT

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