Lupin and Zydus Life Shares Plummet upto 7% After Myrbetriq Patent Case Setback

Shares of Indian pharmaceutical giants Lupin Ltd. and Zydus Lifesciences Ltd. tumbled sharply on April 16, 2025, following a major legal setback. A US Federal Court ruled in favor of Astellas Pharma, the original patent holder of Myrbetriq (mirabegron), a drug used to treat overactive bladder, ordering Lupin and Zydus to withdraw their generic versions from the US market. This verdict has triggered heavy selling pressure on both stocks, reflecting investor concerns over the financial impact.

Market Reaction and Share Price Movement

At 2:10 PM IST, Zydus shares were trading at ₹826.85, down 6.36% while Lupin shares slipped 3.77% to ₹1,936.10. The sharp decline placed both stocks among the top losers on the NSE for the day. 

Financial Impact of the Verdict

Myrbetriq contributed significantly to the US revenue streams of both companies. Zydus was estimated to generate nearly $35 million in quarterly revenue from the drug, while Lupin’s quarterly revenue from Myrbetriq was between $25 million and $30 million. The forced withdrawal of their generic versions will directly affect their earnings, with potential financial penalties adding to the downside risk.

The court upheld the validity of Astellas Pharma’s US Patent No. 8,017,780, rejecting Lupin’s and Zydus’s claims of patent invalidity. This ruling not only bars them from marketing the drug but also opens the door for possible damages based on lost profits to the patent holder.

Legal Background and Future Prospects

Lupin and Zydus had launched generic versions of Myrbetriq in the US after receiving FDA approval but faced patent infringement lawsuits from Astellas. Earlier in 2024, a district court had ruled in favor of the generics, but the appeals court reversed that decision, culminating in this latest setback.

Brokerages like InCred Equities and JPMorgan maintain cautious optimism, suggesting that the companies’ product strategies may not be immediately altered. However, the ruling is expected to stall incremental generic competition for Myrbetriq for six to nine months.

Analyst Views and Stock Outlook

Brokerages have revised their target prices downward amid the uncertainty. Bank of America cut Lupin’s target price to ₹1,560 from ₹1,660 and Zydus Life’s to ₹1,145 from ₹1,310. Nomura highlighted two possible outcomes: either the generics will be barred from sale, impacting earnings, or they may continue selling with risks of damages limited to upside earnings. The patent case accounts for approximately 8% of Lupin’s FY25 profits and 12% for Zydus Lifesciences, indicating a material impact if the ruling is enforced fully.

Conclusion

The US Federal Court ruling against Lupin and Zydus Life in the Myrbetriq patent case marks a significant challenge for both companies. The decision to uphold Astellas Pharma’s patent rights curtails their ability to market a key generic drug in the US, potentially denting revenues and inviting financial penalties. While appeals and legal strategies remain possible, the immediate market reaction underscores investor concerns over near-term earnings and growth prospects.

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