The US Food and Drug Administration move to stay the approval for AmVaz, the anti-hypertension and angina drug from Dr Reddy's Laboratories, has dealt a serious blow to the Hyderabad-based company, according to analysts.

Pfizer, the world's largest pharma company, earns close to $2.3 billion annually through sales of Norvasc, its branded anti-hypertension drug, in the US.

Dr Reddy's was expected to garner a market share of between 10 and 15 per cent once it had received approval from the US authorities in October last year.

According to analysts, Dr Reddy's AmVaz has an earning potential of close to $200 million in about two years and margins could be as high as 50 per cent on the drug.

Earlier on Saturday, Dr Reddy's said the FDA planned to review Dr Reddy's application to market a version of Norvasc.

The FDA would stay the approval, granted in October, according to a statement from Dr Reddy's, India's only drugmaker listed on the New York Stock Exchange.

Dr Reddy's version of Norvasc differs from Pfizer's in that it attaches the main chemical in the drug, amlodipine, to a different salt. Pfizer contends it should have patent protection till January 2007.

The FDA review letter comes as the company and investors await a US court verdict following hearings last July in which Pfizer challenged Dr Reddy's right to market the drug.

"This is a small victory for Pfizer but not a fait accompli for either side," said Rajesh Vora, vice president at ICICI Securities Ltd.

"It is a speed breaker for Dr Reddy's. I have been negative on the stock and remain negative because there is still a long road ahead. There are risks which the stock's price does not factor in," he added.

At Friday's closing price of Rs 1,332.40, the stock was down around 6.7 per cent since the start of this year. The Bombay Stock Exchange Sensex fell around 0.9 per cent in the same period.

Norvasc is the world's top-selling hypertension medicine and investors are hopeful that Dr Reddy's, which has not seen a big product launch for nearly two years now, will win the case which could give a boost to revenue and profits.

The Indian firm used the 505 (b) (2) route of law to apply for FDA permission to market its version of Pfizer's Norvasc.

Under this law, the FDA approves drugs that have slightly different formulations to the original without subjecting the new product to the same level of clinical trials for safety and efficacy.

Dr Reddy's said the FDA's latest letter indicated the re-evaluation was prompted by questions raised about the source of the data relied on by FDA in its review.

The FDA indicated it believes that the approval of AmVaz  --  the brand name for Dr Reddy's product  --  did not rely on any proprietary data from Pfizer's new drug application, the statement said.

"We are confident that FDA's initial decision was correct and remain optimistic of a positive outcome of FDA's re-evaluation," the statement quoted G V Prasad, chief executive of Dr Reddy's as saying.