Lupin Ltd. May Spend Up to $1 Billion to Buy Brands in the U.S.
Published: Mar 14, 2013
Lupin Ltd. (LPC), the drugmaker founded by Indian billionaire Desh Bandhu Gupta, is seeking to acquire brands in the U.S. to expand its most profitable business, and may spend as much as $1 billion on a deal. Lupin may buy a pediatric brand in the U.S. as well as a company that makes generic products such as oral contraceptives in Brazil, Managing Director Kamal Sharma said in an interview in Mumbai. The U.S. contributed 35 percent of Lupin’s sales in the year to March 31, according to data compiled by Bloomberg. The company, which became the world’s biggest maker of formulations to treat tuberculosis by copying drugs, is adding to its portfolio of three patent-protected medicines after failing to prevent Mylan Inc. (MYL) from selling a generic version of its cholesterol therapy Antara. Profit margins for branded treatments are double when compared with generics, according to Hitesh Mahida, an analyst at Fortune Equity Brokers (India) Ltd. “Brands, unlike generics, give them more opportunity to venture into products where there’s less pricing competition,” said Sarabjit Kour Nangra, an analyst at Angel Broking Ltd. in Mumbai. “Branded products result in higher marketing, sales and legal costs, but equally they enjoy pricing power.” Lupin, named after a leguminous flower, had 5 billion rupees ($92 million) of cash as of Sept. 30, and will borrow to fund acquisitions, Sharma said. The company will only make the purchase if it’s confident it can recoup the investment in five to seven years, he said. Sharma, 65, didn’t say if the company is in talks with any firm for an acquisition. Share Performance: The drugmaker’s shares have risen 41-fold in the past decade, making it the third-best performer in the 40-company MSCI AC Asia Pacific Free/Health Care Index (MXAP0HC) in the period. They rose 0.1 percent to 600.35 rupees in Mumbai.