M&A on the radar: Lupin MD

The spotlight is clearly on an acquisition this year, Nilesh Gupta, Lupin Managing Director, said.

However, it will not be “reactionary” or done in a “knee-jerk” fashion, he added.

Gupta was referring to the drug-maker’s financial performance for the three months ended March 31that were below market expectations.

Lupin’s profit after tax in the last quarter stood marginally lower at ₹547 crore , compared with ₹553 crore in the corresponding period last year.

Net revenues in this period stood at ₹3,054 crore, compared with ₹3,051 crore in the same period last year.

“We are impacted by reasons similar to what has affected the rest of the industry,” Gupta told BusinessLine , referring to the pricing pressures in the US, besides the slowdown in approvals for new products.

The company has also been investing in research and people, he added. Lupin Q4 revenues were down 6 per cent in the US, up 9 per cent in Europe, up 15 per cent in India and down 9 per cent in Japan.

Projecting a growth of 15 per cent in the year ahead, Gupta said: “M&As (mergers and acquisitions) are certainly where the spotlight is.”

Confirming that he expected to seal a deal this year, he said it could be of speciality products or companies in the US and Europe.

In Brazil and Russia, two markets where Lupin does not have its own presence, the acquisition targets would be companies, he added.

Referring to the regulatory observations that the company’s Madhya Pradesh facility had received from the US Food and Drug Administration, Gupta said there were five inspections across sites over the last six months and all had been cleared. For the year ended March 31, the company posted a 31 per cent growth in net profit at ₹2,403 crore against ₹1,836 crore in the corresponding period last year.

Net sales grew 13.6 per cent to ₹12,599 crore in the year under review against ₹11,086 crore in the previous year.

The company’s revenues in the year grew 16 per cent in the US, 7 per cent in Europe, 20 per cent in India and 2 per cent in Japan.

Lupin has acquired 100 per cent equity stake in Brazil’s Medquímica Indústria Farmacêutica SA, the company said in a late breaking development, without divulging financials.

The acquisition marks Lupin’s foray into the high growth Brazilian market and would also shore up its position in the Latin American pharmaceuticals market given its acquisition of Laboratorios Grin in Mexico last fiscal, Lupin said.

Incorporated in 1975, Medquímica is engaged in the development, manufacturing and commercialisation of generics and OTC products. It recorded net revenues of approximately BRL 94 million ($31 million) in calendar year 2014 and has over 550 employees.

Brazil’s pharmaceutical market has doubled in size from 2009-2013, expanding at a CAGR of 17 per cent, driven by growing public health expenditure and increasing household income.

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