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Lupin hikes R&D spend to support US facility

Thursday, 8 May 2014 - 6:35am IST | Agency: dna

Pharma company reports 35.5% growth in quarterly net profit to Rs 553 crore

Pharma major Lupin, which on Wednesday reported a growth of 35.5% in its net profit for the January-March quarter at Rs 553 crore, is planning to increase its research and development spend from 8.4% to about 10% to support its upcoming R&D facilities in the United States.

Revenue expenditure on R&D for the year 2013-14 stood at Rs 929.4 crore, 8.4% of net sales as against Rs 709.8 crore, 7.5% of net sales for the year 2012-13. Revenue expenditure on R&D for the quarter ended March 31, 2014 stood at Rs 245.6 crore, 8% of net sales as against Rs 199.9 crore which was 7.9% to net sales during the corresponding period the previous year.

Kamal K Sharma, vice chairman, Lupin, told dna, "We are investing sizeable amount for setting up two new research centres in Florida and Maryland to develop inhalation and complex injectibles. We have also forayed into technology intensive injectable space by acquiring Nanomi BV recently. The overall research spends can actually go up to even 10% in this fiscal." For the year ended March 31, Lupin clocked a net sales of Rs 11,086.6 crore, up 17.2% over the previous year.

The company reported a net profit of Rs 553 crore in the fourth quarter ended March 31, as against Rs 408 crore during the corresponding period the previous year on the back of strong growth in the US, Europe and South African markets. Net sales for the quarter rose 20.3% to Rs 3051.5 crore while total revenue grew by 20.7% to Rs 3120.5 crore during the quarter. Other operating income during the quarter grew 42.6% .

Nilesh Gupta, managing director, Lupin, said, "We have had another year fueled by strong growth in key markets like the US, Europe, South Africa and in our API business. Importantly, we were able to improve operational efficiencies substantially. The year also marked our entry into high growth markets like Mexico and acquiring technology research capabilities that would help us address niche segments like complex injectables and inhalation."

During the quarter under review, the US and Europe formulation sales (including IP), which contributed 51% to the overall sales, grew 28% to Rs 1549.4 crore compared to Rs 1,212.3 crore during the same period last fiscal. South African market also witnessed a growth of 18% in its revenue to Rs 380 crore. Active pharmaceutical ingredients (APIs) sales also grew 20% to Rs 291.4 crore

However, the Indian market, which contributed 22% of the company's overall revenues, grew 5% to Rs 2479.5 crore during the fiscal year 2013-14. During the quarter under review, it grew by 2% to Rs 576.3 crore. Sharma said the last year had been difficult for the company in terms of the Indian perspective, thanks to the new drug price control order and trade-margin related issues. "We are positive that this year our India growth will be far better than what we had last fiscal," Sharma said.

The company has recently acquired Mexican ophthalmic drugmaker Laboratorios Grin and is now considering something on similar line in Brazil. According to Sharma, the company is currently considering the right strategy to enter the Brazilian market. "It could be in the form of an arm of the Mexican operations to Brazil or if there is some other asset that may fit within ours, we can also look at it as well," Sharma added.

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