In an otherwise flat market for pharmaceutical stocks, shares of Lupin hit a new high of Rs 908 on Friday, with investors noticing a major growth potential in the company’s earnings. By the end of the day, there was profit booking and Lupin closed with a gain of 0.97 per cent at Rs 899.

Other pharma majors, such as Dr Reddy’s Laboratories, gained 0.46 per cent to Rs 2,349, while Cipla was up 0.38 per cent at Rs 415.

Dream run

The Lupin stock has been having a dream run on the bourses since it was included in the NSE Nifty on September 28, 2012. It jumped over 50 per cent, compared with UltraTech Cement, which also entered the Nifty on the same day, remains at the same level.

Lupin has recently entered into a strategic partnership to market MSD’s 23-valent Pneumococcal polysaccharide vaccine (PPV) in India. Lupin is to have the non-exclusive licence to market, promote and distribute MSD’s 23-PPV under a different brand name in India.

Last month, the US Supreme Court had ruled that generic drug makers cannot be sued over defects in the original drug. While the US apex court’s 5-4 split verdict is favourable for the entire drug industry, Lupin may have an upper hand, say analysts, as it has filed for an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration for two oral contraceptives, Yaz and Yasmin.

The innovator of this drug, Bayer, is facing lawsuits over certain side effects. The launch of Lupin’s two products was uncertain after the Mumbai-based company indicated that it may also be sued if it launches the drug in the US. The US apex court ruling has removed that uncertainty.

Chirag Talati, analyst, Espirito Santo Securities, said Lupin has now seen a wave of product launches in the US market over the past two quarters, including niche oral contraceptives such as Lutera, Seasonique, Nordette, Seasonalet and Tricor.

Fully integrated

Lupin has transformed itself from an active pharmaceutical ingredients player, focused on anti-TB and anti-infectives, to a fully integrated generics company with a focus on the US generics and specialty branded market, he added.

The two oral contraceptives, Yaz and Yasmin, to be launched by Lupin in the US, have limited competition. The oral contraceptive market is estimated at $590 million. Lupin is one of the few companies to have filed ANDAs for both the products and could potentially launch one or both by the end of next fiscal.

Yasmin and Yaz can open up a big opportunity for Lupin, with only three generic players – Sandoz, Teva and Actavis – in the market, analysts said.

Lupin produces and develops a wide range of branded and generic formulations and active pharmaceutical ingredients. The company is a significant player in the cardiovascular, diabetic, asthma, paediatric and anti-infective space and holds a leadership position in the anti-TB and cephalosporin segments.

The company’s consolidated net profit jumped 162 per cent to Rs 408 crore, while net sales grew 35 per cent to Rs 2,537 crore in the fourth quarter.

(This article was published on July 19, 2013)
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