Lupin eyes drug brands in US, Japan

Lupin Ltd, India’s third-largest pharma company, is looking to acquire drug brands overseas as it seeks to reduce reliance on less profitable generic medicines.

“There is an active ongoing effort and we are looking at multiple assets. We are hopeful of closing one or two opportunities within the current fiscal,” said Vinita Gupta, director, Lupin. The areas being looked at include paediatric, dermatology, ophthalmology and respiratory.

While Gupta did not specify the geographies eyed for the acquisitions, analysts said the buys will happen mainly in the US, followed by Japan and Europe.

Lupin is seeking to maintain its fastest pace of quarterly sales growth in at least three years by adding to its product portfolio in the world’s biggest drug market. The company and rivals including Ranbaxy Laboratories are shifting strategy to cut their dependence on selling generic versions of medicines as the number of formulations losing patent protection plummet from their peak in 2012.

Lupin earned more than five times as much selling branded medicines such as Antara, a treatment for reducing cholesterol, compared with average sales of all its copycat formulations, according to Fortune Equity Brokers.

In an earlier interaction with DNA Money, Ramesh Swaminathan, president – finance & planning and CFO, Lupin had said the company will invest around $100-120 million (Rs550 crore) in capital expenditure this fiscal. To be funded through internal accruals, the money would be spent across various therapeutic areas and expansion of existing units.

The funding for the international acquisitions will be over and above the capex outlay by the management for this fiscal, said an analyst with a domestic broking firm.

A company spokesperson said the June quarter results beat street estimates by 7-10% in turnover and net profit and 15% on earnings before interest, tax, depreciation and amortisation.

Lupin and larger rivals including Ranbaxy and Dr Reddy’s are trying to boost profit by offering products that are similar though not identical to those protected by patents, claiming they are not copycat versions.

The US FDA classifies such formulations as new drugs, and if approved, they can be sold exclusively for as long as three years in the US.

“If the product clicks, then you make a lot of money and your margins will be also higher,” Bino Pathiparampil, a pharma analyst at IIFL, said. “The development costs will be far higher than an ordinary generic though.”

Lupin has a network of 170 sales representatives in the US to sell its branded portfolio, its president Nilesh Gupta said, adding the company’s future acquisitions are likely to be in an area that doesn’t require a large number of sales personnel.

Lupin is focusing on brands that “don’t need 500 representatives to cover a good number of doctors,” he said. With Bloomberg