On Monday, Nomura/Instinet changed its rating for Cipla Ltd. (CIPLA:IN) shares, moving from Neutral to Buy and increasing the price target to INR1,800.00, up from the previous INR1,568.00. This upgrade comes after the recent announcement by Cipla on October 31, 2024, regarding the US Food and Drug Administration's (USFDA) reclassification of its Goa facility.
The USFDA has classified the Goa site as Voluntary Action Indicated (VAI) after an inspection that took place in June 2024. This marks a significant turnaround for Cipla, as the facility had been under a warning letter since February 2020. The analyst from Nomura/Instinet believes that this clearance is likely to pave the way for the approval of gAbraxane, which is expected to face limited competition initially.
The report anticipates increased competition in the latter half of the fiscal years 2026 and 2027, with two additional generic approvals projected. However, it is not expected that this will have a significant impact on Cipla's earnings. The analyst views the development as a positive sign of significant regulatory progress and also suggests that it bodes well for the future clearance of Cipla's Indore formulation site.
Cipla's presence in the US market is distinguished by its portfolio of inhalers, injectables/peptides, and antiretrovirals (ARVs). The analyst expects that inhalers and injectables will contribute to the company's upside in fiscal years 2025 to 2027, while ARVs are likely to make a material contribution beyond fiscal year 2030.
The report from Nomura/Instinet concludes by highlighting Cipla's product pipeline, which is detailed in their analysis, emphasizing the company's potential growth in the pharmaceutical sector.
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