The Hindu Business Line : Earnings model keeps Lupin profits healthy

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Earnings model keeps Lupin profits healthy

Scouting for more acquisitions, intellectual property generation

Our Bureau

Mumbai, Oct. 24 A “judicious mix” of imports, exports and borrowings has not just insulated drug-maker Lupin Ltd from the impact of a strong rupee, but also helped the company post a healthy net profit for the three months under review, said Lupin’s Managing Director, Dr Kamal K. Sharma.

While the company’s strategy has been to have a sustainable earnings model, given the fluctuations of the rupee, the company hopes that its “progressive hedge” would keep its bottomline from being affected. But for fresh contracts, Lupin is looking to negotiate in more stable currencies like the Euro, he told Business Line.

About 51 per cent of Lupin’s total revenues come from its international operations, he said. And for the quarter under review, exports had grown by 59 per cent.

More acquisitions:

Earlier this month, Lupin had picked up majority stake in Japanese generic company Kyowa Pharmaceutical. But Lupin will continue to scout for overseas acquisition targets in strategic markets or if they provide a head-start in a new therapeutic area, he said. The company has about $50 million in its kitty.

On the acquisition in Japan, he said, operations should get underway in right earnest. The acquisition comes at an inflection point in the Japanese market, when the Government is “firing on all cylinders” to increase the share of branded generics in the $60-billion Japanese market, he said.

Lupin was committed to keeping the “face of the company”, its 240 employees, manufacturing facility, etc, he added. Given that the two companies already have an over three-year relationship, he said, the systematic integration would take place smoothly.

Research plans

Apart from scouting for more acquisitions, Lupin is looking to continue delivering an improved performance, besides generating more intellectual property through research, he said.

At present, about 20 per cent of the company’s filings in the US are patent challenges and 30 per cent are “super generics” or finished medicines that are difficult to make, he said.

The company has over 50 filings in the US and looks to have another 17 more in the current financial year. On receiving regulatory clearance on these filings, Lupin will be able to sell in the US. The company also has filings in Europe, Australia and South Africa, he said.

Lupin spends about 6.5 per cent of its annual sales on research, he said, and does not have a view on demerging its research yet, he added.

Parts ways with Symbiotic

Meanwhile, the company has “not proceeded” on its agreement with Symbiotec Pharmalab Ltd of Indore. Lupin was to pick up an equity stake in Symbiotec, but the company did not follow through with the plan as Symbiotec’s promoters had different plans. Moreover, Lupin was looking to get into the hormones and steroids market itself, he said.