Mumbai: Indian drug maker Lupin Ltd is chalking out a Rs450 crore capital expenditure plan to be implemented in 2009-10 as it seeks to accelerate growth.
The company may also strike one or two deals in Japan in the next two quarters, which could be licensing agreements and not necessarily acquisitions, company officials said.
The idea is to increase capacities in India, which will then service most of Lupin’s global markets. The process of production transfer to India will take about 12-20 months.
“We have been acquiring quite a few companies outside the country. At some point of time we would look at backending of production into India as well. It makes sense to back-end production to India because it is cheaper out here,” said Lupin’s chief financial officer Ramesh Swaminathan.
Lupin made three acquisitions outside India in the last fiscal, buying stakes in Hormosan GmbH of Germany, Pharma Dynamics Co. of South Africa and Multicare Pharmaceuticals Philippines Inc. Lupin’s Indian operations will eventually support its Japanese subsidiary Kyowa Pharmaceutical Industry Co. Ltd as well.
“We are growing in Japan also. There will be tremendous utilization of capacity out there but at some point of time we would be looking at expanding by either expanding capacities in Japan or by backending production in India,” said Swaminathan.
He said this will help to maintain margins in an increasingly competitive Japanese generics market.
“In the next three years we are expecting to double our turover to about 20 billion yen, which is roughly $200 million, which will translate to about Rs800-900 crore,” said Vinod Dhawan, who heads Kyowa.
Kyowa contributed about Rs400 crore to Lupin’s overall revenue in 2008-09.
While the planned launch of seven-eight products this fiscal in Japan will pump up its revenue, the company believes the strategic change to move API (active pharmaceutical ingredient) production in-house and the eventual transfer production from Japan to India will boost margins.
Dhawan expects margins to touch 50% levels in the next two-three years.
Lupin shares rose Rs39.55, or 4.41%, to Rs936.50 at the close of trading on the Bombay Stock Exchange while the benchmark Sensitive index fell 219.37 points, or 1.46%, to 14,843.12.