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Lupin eyes popular GSK brands

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  • Published 23.07.14

Mumbai, July 22: Lupin, India’s fourth largest drug maker by sales, is eyeing some of the mature brands of GlaxoSmithKline Plc (GSK).

These well-known brands, believed to be up for sale, include Imitrex (used to treat migraine), Zantac (for stomach ulcers) and anti-depressant Paxil.

The buzz is that GSK is looking to sell rights of these drugs in North America and Western Europe. The combined sales of these drugs are estimated at over $1.7 billion.

Lupin has made numerous acquisitions in the past, but the buyout of these popular GSK brands, if successful, could be its biggest deal so far.

Reuters, quoting multiple sources, said in its report that GSK was looking to divest the mature products to improve its growth profile.

Assuming a multiple of between two and three times of the current sales, the assets on the block could fetch between $3.5 billion (Rs 21,000 crore) and $5 billion, the report said.

While officials from Lupin were not available to comment on the news, analysts felt the company could make a bid for at least some of these brands as they fit perfectly with Lupin’s strategy of growing in developed markets such as the US through strong generic drug brands.

For the year ended March 31, 2014, Lupin had cash and cash balances of Rs 974 crore. However, industry circles feel it will not be difficult for Lupin to source funds to buy the GSK brands.

The company, which commenced operations in 1968, was initially focused on the anti-tuberculosis market and went on to become one of the world’s largest manufacturers of tuberculosis drugs.

The company diversified to other therapeutic categories and also tapped global markets such as the US, Europe, Japan and South Africa. In 2001, Lupin ventured into the US market when it commenced the supply of cephalosporins to its alliance partners.

Since then the growth has been strong and now it is the fastest growing generics player in the country with a market share of 5.3 per cent by prescriptions, according to IMS Health.

Lupin has also been selling branded products in the US. One such is the Suprax antibiotic, which was acquired from Wyeth, a unit of Pfizer Inc. The company was successful in notching good sales for the brand.

Close to 44 per cent of the sales at the Rs 11,087-crore company now come from the US market.

For the year ended March 31, 2014, Europe accounted for 3 per cent of Lupin’s total sales. The drug company now has around 72 products in the US market of which five were launched in the last quarter of 2013-14. It is the market leader in 29 products marketed in the US generics market.

Lupin chief executive Vinita Gupta had earlier said the company wanted to enhance its branded generics business in the US.

In April, GSK chief executive Andrew Witty had said the company was reviewing its portfolio of mature drugs, known as established products, and in May the group invited sector players and private equity firms to consider bidding.

Non-binding offers are expected before the end of the month, according to several sources who asked not to be named because the talks are private, Reuters said.