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Lupin goes all out to make up for lost chances

Lupin goes all out to make up for lost chances
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First Published: Mon, Feb 08 2010. 12 01 AM IST

Graphic: Ahmed Raza Khan / Mint
Graphic: Ahmed Raza Khan / Mint
Updated: Mon, Feb 08 2010. 12 01 AM IST
Mumbai: India’s fifth largest drug maker by revenue, Lupin Ltd is charting a new course by investing in its intellectual property division, acquiring new assets in Latin America, and filing scores of new petitions to enter the US market to make up for years of missed opportunities.
Graphic: Ahmed Raza Khan / Mint
Lupin’s president and director Nilesh Gupta, son of founder Desh Bandhu Gupta, in a candid interview admitted past shortcomings at the firm, which for three decades has been known as a low-cost antibiotics maker focused on the domestic market for tuberculosis drugs.
“We missed a golden period of ANDA (abbreviated new drug application) filings,” he said. “In the general sense we focused on anti-tuberculosis and anti-infectives while everyone else in the world was into chronic (disease) segments.”
An ANDA filing is an application with the US Food and Drug Administration for permission to introduce a generic version of an already patented drug in the market.
In 2009, Lupin filed 28 ANDAs in the US, and expects to file 35 this year, Gupta said.
The high number of filings is a reflection of sweeping changes Lupin has made to its research and development (R&D) unit as part of its so-called “Growth Orbit II” strategy.
It has also revamped its research strategy, and in 2009 hired two expatriate R&D chiefs—Raj Kamboj, who heads new drug discovery and development, and Ninad Deshpande, who will head generic R&D and advanced drug delivery, with a combined team of 150 new employees to energize its modest research record.
“We only had APIs (active pharma ingredients or bulk drugs), but that was a dying species,” Gupta said, explaining the reason why Lupin was restrained by its conservative approach.
“If we had started on generics (business) five years before we finally embarked on it, we would have been in a very different position,” he said. “We started late. The game is changing and generics is becoming very competitive even as the regulatory framework has become more stringent.”
But the changes that Lupin belatedly undertook a decade ago are beginning to pay off. It reported an increase in consolidated net profit of 38% to Rs160 crore for the quarter ended December, and based on its December quarter performance is now a $1 billion (Rs4,660 crore) firm in revenues.
International filings, and partnerships with distributors in those markets, have put Lupin among the 10 fastest growing generics firms in the US and Japan, the world’s two largest pharma markets, according to pharma market data compiled by IMS Health Inc. as of March 2009. Lupin ranked ninth in the US, and eighth in Japan.
The new strategy also targets a revenue of $3 billion by fiscal 2013, which translates into a compounded annual growth rate of 30%. It reported a revenue of Rs1,270 crore for the quarter ended 31 December, against Rs984 crore in the corresponding quarter the previous fiscal, an increase of 29%. In fiscal 2009, Lupin posted a revenue of Rs3,914 crore.
To get those new numbers, the firm is also eyeing an acquisition of a manufacturing base—Gupta said it has shortlisted a few targets—a departure from its earlier focus on acquiring only marketing firms in advanced markets such as the US, Germany and Japan.
According to Gupta, the proposed acquisition could be its most expensive to date, because Brazil and other Latin American countries insist that foreign firms must set up captive manufacturing units.
Also, Lupin is moving away from plain vanilla generic products to controlled release and other unique therapy systems such as new drug delivery and easy dosages.
Controlled release drugs release the dosage into the bloodstream over many hours, instead of all at once, and are considered to be more effective.
“If we add even one new therapy area, we can add 20 new products in the pipeline every year,” Gupta said.
Analysts and investors have both shown confidence in the new moves at Lupin.
“Its US strategy is working. Revenues from US and Eurpean Union region scaled a robust 44% to Rs490 crore, powered by prescription growth in existing products and new launches,” wrote ICICI Securities Ltd’s analyst Rajesh Vora in a 1 February report titled “Base Business Brilliance”.
On 2 February, Lupin shares hit an all-time high of Rs1,624 each before closing at a record Rs1,556.75. On Friday, it closed at Rs1,535.30, a gain 0.53% on the Bombay Stock Exchange on a day the benchmark index dropped 2.68%.
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First Published: Mon, Feb 08 2010. 12 01 AM IST