Cipla Ltd. experienced a surge in its shares, rising over 10% in early trading, after the United States Food and Drug Administration (USFDA) classified its Goa manufacturing facility with a “Voluntary Action Indicated” (VAI) status. This decision removes a significant regulatory hurdle, clearing the path for Cipla to launch its generic version of Abraxane, a crucial chemotherapy drug. The Goa facility had undergone a USFDA re-inspection from June 10-21, 2024, which resulted in six observations.
Abraxane Approval Boosts Cipla's Prospects
The VAI status granted to Cipla's Goa facility is particularly significant because it directly impacts the launch of key products like the generic Abraxane. Abraxane is a paclitaxel-based chemotherapy drug widely used in cancer treatment, boasting a market size exceeding $700 million. Currently, only one generic manufacturer, Sandoz, has received approval for its version of Abraxane in October 2024.
Overcoming Regulatory Hurdles
Previously, regulatory challenges at Cipla’s Goa manufacturing site had cast a shadow over the launch timeline of its generic Abraxane. These challenges had led to multiple delays, prompting analysts to project the drug as a potential revenue opportunity only in FY27. However, with the recent USFDA clearance, Cipla can now proceed with the launch, a development positively received by brokerage firm Citi.
Analyst Optimism
Citi noted that the USFDA's decision significantly improves Cipla's pipeline visibility, as Abraxane remains a key product manufactured at the Goa facility. The brokerage firm suggests the generic Abraxane could potentially be launched within the current financial year, a marked improvement from earlier expectations of a delay until FY26-27. Citi has factored in sales of $24 million to $48 million for the product in FY26 and FY27, with the potential for an additional $25 million to $40 million upside.
Citi maintains a “buy” recommendation on Cipla, with a price target of ₹1,830. Among the 38 analysts covering Cipla, 21 have a “buy” rating, eight recommend a “hold,” and nine suggest a “sell.” As of Thursday, Cipla's shares were trading 8% higher at ₹1,528, marking a 22% increase year-to-date.
