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We highlight that Nubeqa drug usage is set to expand in China (in addition to the US and Europe) with a new treatment option for mHSPC likely to become available soon. This could open up an additional market opportunity for Bayer. Further, Bayer has reported positive Phase III trial results for the efficacy of additional treatment option which could enhance its usage. Bayer expects combined sales of EUR 2.5+bn for Nubeqa and Kerendia drugs in CY25E. Based on past Kerendia sales performance, this implies ~EUR 2.0bn in Nubeqa sales in CY25E which is in line with our expectation. For CY26E/27E, we estimate ~EUR 2.5bn/3bn in Nubeqa sales driven by expanded Nubeqa usage in China, the US and Europe and positive trial results, as indicated above. Further, based on our calculations, the market opportunity size for Nubeqa intermediates is ~4% of Bayer’s Nubeqa sales. This translates to an incremental ~ EUR 20mn in market opportunity per year over CY25E-27E for its intermediates. This indicates a robust demand for Nubeqa intermediates supplied by Ami in CY25E-27E, translating to robust CDMO performance over FY26E-28E. Additionally, a new CDMO contract, and gradual electrolyte additives sales would start contributing from FY26E. We keep our estimates unchanged and expect Ami to register a robust 43% EPS CAGR over FY25E-27E. We maintain BUY with an unchanged Mar’26 TP of INR 2,605/share (based on 35x Mar’27E EPS).

* Nubeqa usage to expand in China; positive trial results for additional treatment: In China, Nubeqa was initially registered for treatment of mHSPC, a type of prostate cancer, in combination with both ADT and docetaxel (refer Exhibit 1). Now, the company has informed that it has filed an application with China’s Center of Drug Evaluation (CDE) for an additional mHSPC treatment using Nubeqa in combination with ADT (refer Exhibit 1). This opens up a new treatment option for the drug, which could expand its usage among prostate cancer patients (refer Exhibit 2) and increase market penetration in China. Further, the continuing Phase III trials by Bayer have provided positive results for the efficacy of Nubeqa + ADT combination (refer Exhibit 3). Given the combination is already approved in 85+ markets (including China) around the world (refer Exhibit 1) for nmCRPC type of prostate cancer along with positive trial results for mHSPC, China market approval for mHSPC should come soon, in our view. This is likely to contribute additional Nubeqa sales for Bayer.

* Nubeqa sales expected to remain robust: In its latest presentation, Bayer has estimated a combined sales target of EUR 2.5+bn in CY25 for Nubeqa and Kerendia drugs which is a ~25% YoY growth from ~EUR 2bn in CY24 (refer Exhibit 5). Assuming a modest growth for Kerendia in CY25E, based on its past sales performance, Nubeqa sales would come to EUR ~2bn in CY25E (>30% YoY growth over CY24) which is in line with our expectation. Further, we believe Nubeqa is likely to achieve ~EUR 2.5bn/3bn in sales in CY26E/CY27E (refer Exhibit 9) on account of i) potential expansion of Nubeqa drug usage in China, in addition to the US and Europe as we highlighted in our previous report (click here), leading to an increased market opportunity, and ii) positive Phase III trial results showing Nubeqa + ADT combination’s efficacy, as indicated above. This builds in a quarterly growth rate of ~5% (against the current growth run-rate of at least ~6% per quarter), incorporating higher base. Given the drug has already reached sales of EUR 443mn in 3QFY25, Bayer remains on track to achieve its EUR 3bn peak Nubeqa sales target in CY27E itself, much ahead of its earlier estimated guidance of CY30 (provided by Bayer in CY22) (refer Exhibits 6 to 8).

* Incremental Nubeqa intermediates opportunity of EUR ~20mn per year: Based on our detailed calculations in our initiating coverage report on Ami Organics (click here), the market size for Nubeqa intermediates comes to ~3.6-4.3% of Bayer’s Nubeqa sales. Taking an average of 4% of Bayer’s incremental ~ EUR 0.5bn in Nubeqa sales per year over CY25E-27E, the total incremental market opportunity for Nubeqa’s intermediates comes to EUR ~20mn per year over CY25E-27E. Going forward, this indicates a robust demand for Nubeqa intermediates supplied by Ami in CY25E-27E, translating to FY26E28E being good for Ami’s CDMO sales. Further, we highlight that the Nubeqa active ingredient patent expiry is on or after CY33 in US and Europe indicating long run way for growth for Nubeqa intermediates (refer Exhibit 10).

* Estimate 43% EPS CAGR over FY25E-27E: On account of i) ramp-up of existing products (Apixaban, Trazadone, etc.), ii) continued strong ramp-up of Nubeqa intermediates contract, iii) gradul contribution from electrolyte additives, and iv) potential commercialisation of another CDMO contract in FY26E, Ami has strong revenue visibility over next 2-3 years. Importantly, rising contribution from the high-margin CDMO business could expand Ami’s EBITDA margin to ~25% by FY27E. Hence, we estimate Ami to register a robust 29%/39%/43% sales/EBITDA/EPS CAGR over FY25E-27E. We maintain BUY with an unchanged Mar’26 TP of INR 2,605/share (based on 35x Mar’27E EPS)

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