Lupin looks at big-ticket alliances, acquisition in India

Big-ticket alliances, even a domestic acquisition, are on the plan charted by drug-maker Lupin to grow its business in India.

But it would take one more large acquisition in the domestic pharmaceutical industry for the present overheated valuations of companies to settle, following which local consolidation will take place, observes Mr Shakti Chakraborty, Group President, India Region Formulations.

A handful of Indian drug companies have in the recent past sold operations, partially or entirely, to multinationals, at whopping valuations. Valuations are still sky-high, he agrees, but one more deal and the stage is set for consolidation in the domestic marketplace, he adds.

Not takeover target

Mr Chakraborty himself is no stranger to takeover talk, as the business he heads finds itself in the news for the same reason — as a possible takeover target.

So is it frustrating when a business, growing at about 20 per cent and contributing 27 per cent (at Rs 1,573 crore) to the consolidated turnover, is rumoured to be on the block, or is it a backhanded compliment — as it indicates that industry-matchmakers find the business attractive?

“Being a member of the Lupin family, you take it in your stride,” says the 60-year old industry veteran. “Lupin is not on the block,” he says, adding in fact, that the company is looking at other Indian companies for a suitable opportunity to acquire. The target company should have large brands, he elaborates.

Alliance and wellness

Outlining the road ahead, Lupin will see more big-ticket deals, like the recent tie-up with Eli Lilly for insulin, Mr Chakraborty says, sitting in his corner room, overlooking several offices at the Bandra Kurla commercial hub.

The Lilly deal would generate business of about Rs 150 crore, he indicates, adding that as confidence builds, the alliance could expand too. “We are talking to several companies …this will be the order of the day,” he says, adding that the company was keen on bringing in patented products.

Lupin also eyes the healthcare and wellness space with interest.

With categories such as pain-management, skincare, vitamins, and so on, Lupin is keen on the fast moving health goods sector, he says.

The over-the-counter (OTC) sector, which seems to be attracting several large companies, already contributes about Rs 175 crore annually, says the company spokesperson.

Once known for its dependence on tuberculosis drugs, Lupin's tuberculosis portfolio has come down from 52 per cent to 10 per cent, and growing at about 8 per cent, he says.

Industry challenges

For the industry growing at a steady 14 per cent, challenges are in the form of drug price control and an economic slowdown, if it happens, he says, having watched the pharmaceutical landscape morph over the years.

Projections made for the year by consultant companies, even three years ago, are very different from ground realities today, he observes. “But one thing I can assure you, even if I may not be there (in the company) for long time…Lupin will not sell,” he says, rather emphatically.

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