New Delhi, Dec. 3 -- Shares of Natco Pharma Ltd have dropped 38% from the 52-week high of Rs.1,505 (December 2024), as the Street grows cautious about its high-risk, high-reward business model.

Natco focuses on extremely complex, niche drugs, mainly in cancer treatment, injectables, peptides, and legally challenged patents in the US market. Natco doesn't wait for patents to expire; it challenges them through a legal process called Para-IV.

If Natco wins or settles, it gets permission to launch the generic version early. This strategy brings big rewards when it works, but the advantage lasts only for a limited period, creating significant earnings volatility. For example, revenue fell from around Rs.1,371 crore in Q2FY25 to just Rs.475 c...