How big is the latest COVID-19 drug opportunity for Divis Laboratories?
(Representational Image) | Photo Credit: iStock Images  Key Highlights Merck announces supply agreement with US government for Molnupiravir Divis Laboratories is Mercks authorized API supplier for Molnupiravir Divis Laboratories could achieve Rs.2900 crores of Molnupiravir sales in FY22E, says Macquarie  US pharma major Merck announced that it has entered into a procurement agreement with the United States government for Molnupiravir (MK-4482). Molnupiravir is currently being evaluated in Phase 3 clinical trial, the MOVe-OUT study, for the treatment of non-hospitalized patients with laboratory-confirmed COVID-19 and at least one risk factor associated with poor disease outcomes. This investigational oral therapy being studied for outpatient use early in the course of disease with mild to moderate COVID-19. US government commits to purchase approximately 1.7 million courses of Molnupiravir upon issuance of emergency use authorization or approval by the US Food and Drug Administration(FDA). Merck is developing Molnupiravir in collaboration with Ridgeback Biotherapeutics. If the drug happens to receive Emergency Use Authorization (EUA) or approval by the US Food and Drug Administration (FDA), Merck will receive approximately $1.2 billion from the govt. This particular drug commercialisation could present a significant opportunity for Divis Laboratories of India, says brokerage firm Macquarie. Divis Laboratories is Mercks authorized API supplier for potential COVID-19 drug Molnupiravir, the supply of which is expected for US, EU, and other regulated markets. Divis Laboratories is also allowed to supply Molnupiravir API to Mercks (MSD) licensed partners for India. Macquarie's analysis suggests Divis Laboratories could achieve Rs 2,900 crores of Molnupiravir sales in FY22E. Currently, Macquarie factoring in barely Rs.500 cr of Molnupiravir sales for Divis Laboratories in FY22 as of now due to pending trials, approvals, and contracts in ex-US markets. Macquarie also marks that Mercks US deal for Molnupiravir throws light on attractive pricing and potential volumes. Macquarie maintains its outperform rating on the stock with target price of Rs 4,806.