With an eye on US, Lupin to buy Gavis for $880 m

Our Bureau MUMBAI | Updated on January 24, 2018 Published on July 23, 2015





Biggest foreign purchase by an Indian drug firm; will give Lupin entry into niche areas

Lupin has agreed to buy New Jersey, US-based Gavis for $880 million (over ₹5,600 crore) in a deal billed as the largest foreign acquisition by an Indian drugmaker.

The “landmark transaction” will significantly boost Lupin’s growth prospects in the US, said Vinita Gupta, CEO of Lupin.

Lupin had been studying the company for many months before snapping it up in a competitive bidding process. A privately held company, Gavis is a good cultural fit for Lupin in terms of developing differentiated dosage products, she said.

The deal will accelerate Lupin’s entry into niche areas, such as controlled substances, gastro-intestinal products and dermatology, she said. Also coming into Lupin’s fold are 250 employees, a manufacturing site — Lupin’s first in the US — and a skilled US-based research and development organisation.

By having a manufacturing site in the US, Lupin will be able to participate in government programmes and the controlled substance business, Gupta said.

Explaining the high valuation of Gavis, whose revenues stood at $96 million for fiscal year 2014, she said the company’s pipeline of products showed tremendous potential and revenues were expected to treble by 2018. The pipeline showed potential not just in scale but also calibre in terms of high-barrier, limited competition generic products, Gupta said. Gavis has 66 abbreviated new drug application (ANDA) filings pending approval with the US Food and Drug Administration. About 72 per cent of its filings are niche dosage products.

Eyes more buys

The deal is the biggest foreign buy by an Indian drug company. And Gupta expected the deal to close in the third quarter. But the ₹12,600-crore Lupin’s appetite for acquisitions is not satiated, she said, adding that the company will continue to scout for speciality products in the US and Europe.

In fact, about two months ago, Lupin’s Managing Director Nilesh Gupta told BusinessLine that the focus was clearly on acquisitions this year. The company has since acquired companies in Brazil and Russia. Recently, Lupin had got its board’s go-ahead for an enabling resolution to raise ₹7,500 crore, possibly for acquisitions. The company has taken a bridge loan for the present deal and could replace it later with long-term financing, said Ramesh Swaminathan, Chief Financial Officer, Lupin.

The latest acquisition is expected to add to earnings from the first full year of operations. The combined entity will have a portfolio of 101 in-market products, 164 cumulative filings pending approval and a deep pipeline of products under development for the US, Lupin said. When the acquisition is closed, the company’s ANDA filings will address a $63.8-billion market, it added.

Published on July 23, 2015
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