Divis Laboratories Share Price Drops 4% Amid Patent Setback Over Entresto API

Market Performance

• Divis Laboratories' share price fell to ₹6,545 in early trade on Monday.
• This marks a 3.5% decline from the previous close, with the stock trading at ₹6,603 around 9:30 AM.
• Despite the decline, the stock has gained over 20% in the last three months.

Main News: Patent Loss Poses Threat to Key Revenue Stream

The decline in Divis Laboratories' share price came after a legal development involving the heart failure drug Entresto.

• Indian drugmaker MSN Labs won a patent litigation related to Entresto.
• The ruling allows MSN to launch a generic version in the US by July 15, 2025.
• Entresto is a major contributor to Divi's custom synthesis business, especially its API segment.

Company Details: Heavy Dependence on Entresto API

Entresto has played a vital role in Divi's growth:

• The drug accounts for about 40% of the custom synthesis segment's revenue.
• It also contributes close to 20% of Divi's total revenue.
• The latest court decision raises uncertainty around Divi's future revenue from this segment.

Financial Performance Snapshot (Q4 FY24)

Revenue

• Total revenue: ₹2,585 Crore
• Year-on-year growth: +12.2%
• Previous year same quarter: ₹2,303 Crore

Net Profits

• Net profit: ₹662 Crore
• YoY increase: +23%

EBITDA Margins

• Gross margins: 62.1%
• Improvement: +122 basis points YoY
• Margin gains attributed to:
  • Stable raw material prices
  • Favorable product mix

Summary

The Divis Laboratories share price came under pressure following a significant patent ruling that threatens a key revenue stream linked to Entresto's API. The generic launch by MSN Labs could impact nearly 20% of Divi's topline, raising investor concerns. While the company showed strong financials in Q4 with double-digit revenue and profit growth, this legal development has overshadowed its recent momentum.

As the pharmaceutical space continues to evolve, all eyes are now on how Divis Laboratories navigates this shift in the custom synthesis segment and diversifies its portfolio to sustain growth.