Cipla’s shares slipped almost 2% on Friday after the U.S. Food and Drug Administration gave final approval to a rival’s generic version of GSK’s Advair inhaler.
What the FDA approved
The FDA granted final approval to a generic Advair Diskus made by Respirent Pharmaceuticals and Lannett. Aurobindo Pharma bought Lannett in July 2023 for $250 million, so this approval adds an extra $30‑$40 million to Aurobindo’s annual U.S. revenue.
How it affects Cipla
Cipla has been waiting for its own generic Advair approval. Citi Research called the rival approval a “marginal negative” for Cipla, but still expects Cipla’s version to be cleared soon. The firm projects its generic Advair could bring about $50 million to its U.S. earnings by fiscal year 2027.
Following the news, Cipla’s stock fell to a nine‑month low of ₹1,436.60 before closing at ₹1,448. Over the past five days the shares are down more than 3%, and they have slipped over 4% in the last month. The stock still carries a price‑to‑earnings (P/E) ratio of 21.70 and a market capitalisation of roughly ₹1.17 lakh crore.
Why investors should care
- Short‑term pressure on Cipla’s share price due to competition in the generic Advair market.
- Potential revenue boost for both Aurobindo and Cipla once both generics are on the U.S. market.
- Long‑term outlook remains positive as Cipla’s stock has risen about 76% over the past five years.
Bottom line
The FDA’s decision gives Aurobindo a head start in the lucrative Advair inhaler market, nudging Cipla’s shares lower for now. Keep an eye on Cipla’s pending approval, as it could restore confidence and add to its U.S. earnings later this year.
Remember, this is perspective, not prediction. Do your own research before making any investment decisions.