Cipla's stock experienced a notable decline on October 11, trading down over 1% at ₹1,600 on the BSE, despite a buy recommendation from global brokerage firm Citi, which set a target price of ₹1,870. This target suggests a potential upside of 17% from Cipla’s closing price on October 10. The market's reaction, however, reflects ongoing concerns surrounding the delayed launch of Cipla's generic version of the cancer drug Abraxane.

Originally expected to launch much earlier, the generic Abraxane launch has been postponed to FY26 due to regulatory challenges at Cipla's manufacturing facility in Goa. These delays stem from a warning letter issued to the facility, highlighting issues that need to be addressed following a recent inspection. Citi has warned that if the resolution of Cipla’s Goa facility encounters further setbacks, the opportunity for Cipla to capture the generic Abraxane market could be significantly diminished. This is particularly concerning as the competitive landscape is shifting, with new entrants poised to take a significant share of the market.

The urgency of launching the generic Abraxane is underscored by the recent approval granted to Jiangsu Hengrui, a China-based company, for its version of Paclitaxel, which is the generic equivalent of BMS’ Abraxane. According to Citi, Hengrui's product is the first interchangeable version (ANDA), poised to significantly impact market dynamics and potentially drive down prices. This could further challenge Cipla, as there are already two non-interchangeable generic versions available in the market.

The implications of the generic Abraxane launch are critical for Cipla. Citi estimates that this product could contribute 6-7% to its earnings-per-share estimates for FY26/27, excluding revenue from its other key product, Revlimid. As Cipla grapples with these challenges, Axis Securities has projected base sales of $230 million for the company in the U.S. market, largely driven by key products like gRevlimid, Albuterol, and Lenotirade.

Despite the recent setback, it’s important to note that Cipla's stock has delivered a 28% return year-to-date, significantly outperforming the Nifty 50 benchmark, which has risen only 15% in the same period. Investors and market watchers will be keen to see how Cipla navigates these challenges and whether it can resolve the issues at its Goa facility to capitalize on the potential market for generic Abraxane.

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