We are looking at assets in Brazil; M&As in India can wait: Kamal Sharma, vice chairman, Lupin

Written by Pallavi Ail | Updated: Nov 1 2014, 06:48am hrs
Lupin, which reported its quarterly results recently, posted a slightly muted sales growth but analysts still consider it a top pick among the large pharma players in India. It aims to maintain a 20%-plus revenue growth rate this fiscal. Lupin vice-chairman Kamal Sharma spoke to Pallavi Ail on the companys expansion plans and strategies to maximise revenue and profit. Edited excerpts:

Lupin entered Mexico with its purchase of Laboratories Grin early this year. Do you plan to expand in the Latin American market

I always maintain that there are two markets which appear most interesting both in terms of size and quality of business and those are Mexico and Brazil. We are looking at assets in Brazil. We have evaluated a few but they have not come up to our expectations, but I am sure, you will see us foray in the market. We recently locked in one in Mexico and the form of Lab Grin, which is an ophthalmology company. Given our interest in ophthalmology as a specialty area, we think this is a very appropriate acquisition for the company to grow the business. We will also use this vehicle to add other therapy areas while we strengthen ophthalmology. We are definitely going to use this base to expand into other areas like biologics.

Any timeline for this Brazil asset purchase

It is difficult to put a timeline on this. You have to make sure that at one level your growth trajectory continues but you are also not desperate to acquire because you are falling short of your targets. You have to evaluate financial and business terms, work out investment, cost and pipeline synergies to make sure you will make a good accretive acquisition in the shortest period of time. We have been looking and even today we are actively pursuing a couple of them.

Sun Pharma bought Ranbaxy showing that inorganic growth may be the way forward. Any M&A plans for Lupin in India

We are not averse to acquiring assets in India. Lupins M&A philosophy is based on the three verticals in which we are operating. One is geographic expansion, the other is technology platform and the third is brand space. Gaining brand space in the US is a top priority besides the acquisition in Brazil. So we would first like to attend to those factors before looking for an acquisition in India. I believe we have been able to establish a very strong position on an organic basis notwithstanding last years exception in terms of NLEM, trade boycotts and general sense of uncertainty. We are back on the cusp of 20%+ growth.

What impact has your competitors manufacturing issues and cephalosporin shortage in the US had on Lupins cephalosporin sales

It is difficult to predict and quantify. Certainly there are some operators which share the benefit when adversity strikes one or two players because the market is always looking to fill the supply line. Teva, Sandoz and Lupin and some 3-4 companies who have products in pipeline, benefited. Obviously, this kind of profit sharing depends on several factors such as the capacity to serve the market gap, the trade channel partner you are working with and the pricing demand.

Lupin is known to have a branded portfolio some of which are products innovators sold due to small market size. Will this be a conscious strategy going ahead

Branded business is extremely, extremely important for us because we believe it takes away the challenge of price erosion in generic business, compensates for it because this is one business where you can afford to even increase prices unlike in the generic drugs. There is a certain class of products which do not appear attractive to Big Pharma companies. When a product nears patent expiration, they seem to lose interest in it, maybe due to overheads associated with it.

Sometimes they like to divest at the tail-end of the brand. We value our brand business and I think we started out very well and we had some challenges such as Antara which we thought had patent protection till 2020. But it faces a challenge mid-course. We have deployed a strong commercial strategy to hold on to prescriptions and to get market share for the brand. Suprax has done quite well. We have been able to retain the brand for 10 years. We are launching another brand AeroChamber which we are promoting for Forest Labs by the last quarter of this fiscal.