Pharma major Lupin aims to crack the $96-billion pharma market of Japan, the second largest globally, through its second acquisition in the island nation, by building a strong foothold in the hospital segment there. So, it comes as no surprise that Lupin has zeroed down upon $70-million I?rom Pharmaceuticals, that specialises in a comprehensive portfolio of injectables, the first line therapy used in hospitals.
While refusing to divulge the size of the deal citing contractual obligations, Kamal Sharma, managing director, Lupin explained to FE that I?rom would provide Lupin with three things ? a ready comprehensive product portfolio in injectables, manufacturing and development capabilities in a highly specialised space and a skilled sales force equipped to deal with the hospital segment, particularly the diagnostic procedure combination (DPC) hospitals ? which holds great promise for generic drugs in Japan.
This category of hospitals, which accounts for over 40% of all in-patient admissions to acute care hospitals in Japan, is expected to be a significant driver of change as the government there strives to move towards greater usage of generic drugs to reduce healthcare costs.
?Alongside incentivising doctors and pharmacies and streamlining regulatory process to promote generic drug use, the government of Japan through this fixed payment system in DPC hospitals, aims to reduce healthcare expenditure. Under this, hospitals are paid a fixed fee, inclusive of drug cost, instead of fee for each service provided. As cost savings are automatically added to the hospitals? income, these hospitals are compelled to shift to generic drugs to cut costs, ? said Sharma.
There are currently over 1,400 such DPC hospitals in Japan, covering over 35% of all the hospital beds.
?Also, you require a dedicated field force strictly for these hospitals. And through I?rom we would more than triple our sales force strength meant to target this segment. We already have the first mover?s advantage in the market through the Kyowa acquisition. Now is the time to move ahead and build on that by consolidating further,? said Sharma.
He added the deal, which is being executed through Lupin?s Japanese subsidiary Kyowa, would be funded by a mix of internal accrual and debt. The combined sales of Kyowa and I?rom Pharma would touch close to $240 million this financial year, of which over 30% may be contributed by the latter. Japan?s share in Lupin?s revenue kitty may go up to 15%, from the current 11%. Sharma said that the acquisition is largely Japan centric, as the high cost of operation there would make it infeasible to source I?rom products for other geographies. The acquisition would be leveraged for other markets by transfer of tech-knowhow. Lupin is now set to intensify hunt in Brazil, Mexico and Europe for its next target.
