Jupiter plans Swiss buy, will tap EU marts

Will work in tandem with proposed US unit

HYDERABAD: Jupiter Bioscience Ltd is close to a Swiss acquisition which is expected to help it set up a European beachhead to work in tandem with its upcoming US facility to tap the regulated markets in a big way.

Jupiter is one of the very few companies in the world with a primary focus on the peptides space which is estimated to be $12 billion in size and growing at 15% annually.
Peptides are chains of amino acids that play a key role in regulating body functions such as the release of hormones, the regulation of blood sugar levels, bone metabolism and various neurological processes.

The Swiss acquisition by Jupiter, estimated to be in the range of $10 million, will be the first by an Indian company in this space, sources close to the development told DNA Money.

When contacted, Jupiter chairman and managing director Venkat R Kalavanakolanu refused to name the target company but confirmed he was close to finalising the deal within 2-3 weeks.

The acquisition will speed up Jupiter’s entry into the lucrative generic peptides space in the regulated markets as it will acquire two product licenses with readymade goods manufacturing practices (GMP) facility.

At the same time the company will use the European presence to launch four more products in regulated markets in the first quarter of 2009, he added.

“We are in for significant upsides over the next few quarters with several launches and new opportunities in the pipeline,” Kalavanakolanu said.

Before the launches planned in regulated markets, Jupiter will unveil six generic peptide products in unregulated markets before September this year.

Significantly, the company is targeting to launch generics of five products, which currently have a combined brand sales upwards of $5 billion and have just got off the patent protection.

These five products are part of a wish list presented to us by Ranbaxy Laboratories, he said. Ranbaxy holds 14.9% equity in Jupiter. The two companies have an understanding whereby the former will market eight synthetic peptide formulations and active pharmaceutical ingredients (APIs) in regulated markets.

Religare Securities analyst Alok Dalal estimated revenue CAGR of 31.2% to Rs 270 crore over FY07-FY10 putting out a buy call on the scrip with a target of Rs 237 based on a 62% upside on current levels.

“The space has limited competition due to the complex nature of products which ensures lower price erosion when drugs go off patents,” he said in a report on the company. The current valuations of the company are at a 25% discount to mid-cap pharmaceutical companies and at 50% discount to nearest global competitors like Lonza and Bachem, he said.

Meanwhile, Jupiter’s US plant, on which it has already invested Rs 18 crore and will pump in $5-6 million more, will be ready by July this year.

It will carry out very high-end scientific work on last stage synthesis of peptides providing a front-end for US customers while the Hyderabad facilities will deliver the back-end services, a company official added.

Jupiter has also kicked off work on recombinant peptides to develop two products — one each for cancer and cardio-vascular diseases — and an antibiotic. While the cancer drug is expected to be out in 6-9 months, the other two products will be developed in one year, Kalavanakolanu said.

“There is a significant 40-50% value addition at the formulation stage and that is what we will be focusing on to increase margins,” he said, adding the company “was open to co-marketing deals with global majors for the new products that are in the pipeline”.

Our advantage is that we are the only process-oriented peptides company in the world with the ability to scale up very fast, he said.

p_chitti@dnaindia.net