Natco Pharma gets court nod for insecticide launch; stock surges 4%

Natco Pharma shares rose nearly 4% on Tuesday after the pharmaceutical company said it has received a Delhi high court approval for the launch of chlorantraniliprole (CTPR) and its formulations through a non-infringing process. The pharma major plans to launch its CTPR products, used across a wide range of crops for pest management, very shortly, which is estimated to have a market size of over ₹2,000 crore in India.

The U.S.-based FMC Corporation had filed a patent infringement case against Natco Pharma in Delhi High Court, but the homegrown company claimed that it is the first company in India to receive its registration approval by the Central Insecticide Board & Registration Committee (CIB&RC).

“Natco Pharma today received an Order from Hon’ble High Court of Delhi stating that NATCO is allowed to launch Chlorantraniliprole (CTPR) and its formulations, through its non-infringing process,” the pharma company said in an exchange filing on Monday.

“Natco is the first company in India to have received its registration approval by Central Insecticide Board & Registration Committee (CIB&RC) on January 25, 2021, for indigenous manufacture of CTPR Technical 93.00% w/w min,” it added.

CTPR technical is formulated into broad spectrum insecticides used across a wide range of crops for pest management.

Following the announcement, the share price of Natco Pharma opened 2.45% higher at ₹653, against the previous closing price of ₹637.4 on the BSE. During the session so far, the stock gained 3.55% to hit a high of ₹660. There was a spurt in volume trade as 0.46 lakh shares changed hands over the counter as compared to the two-week average volume of 0.58 lakh stocks. The market capitalisation rose to ₹11,931.94 crore. Meanwhile, the BSE Sensex gained 759 points to 59,900, with all 30 shares flashing in the green.

Natco Pharma shares have witnessed selling pressure in the recent past, with the stock hitting a 52-week low of ₹600.1 on September 12, 2022. The counter trades 30% lower than its 52-week high of ₹942.15 touched on January 17, 2022. The midcap pharma stock has given a negative return of 29% in the last one year, while it plunged 28% on a year-to-date (YTD) basis.  

In April-June quarter of the current fiscal (Q1 FY23), Natco Pharma reported a multifold growth in consolidated net profit to ₹320.4 crore as ₹75 crore in the same period last fiscal, led by ramp-up in Revlimid, the first generic version of Lenalidomide used in the various blood cancer treatment. The consolidated revenue from operations more than doubled to ₹884.6 crore, from ₹410.3 crore in the same period last fiscal. The revenue from the pharmaceutical segment surged to ₹883.6 crore, from ₹409.7 crore in the corresponding period last year, aided by income from the settlement of claims received by its arm, Natco Pharma (Canada) Inc, under a settlement agreement.

Post Q1 results, ICICI Securities maintained “BUY” call on the stock with a revised target price of ₹818 per share, from earlier estimates of ₹856, a potential upside of 19% from the current market price.