Lupin plans mega acquisition in US

The Rs 642 crore Lupin Laboratories is India’s largest maker of oral and injectible cephalosporins and market leader in the anti-TB market. As much as 25 per cent of turnover comes from new products. Lupin, the second largest pharma exporter after Ranbaxy, is expected to consolidate its position after the acquisition.

The Lupin group had last year sold LupinAgrochemicals to Cheminova of Denmark for a consideration of Rs 50 crore. In the recent days, the Lupin scrip had witnessed a flurry of activity on rumours of the acquisition. The company was also in news as its promoter, D B Gupta, was planning to privately place close to 10 per cent of his 75 per cent stake in the company. But the promoter’s holding would go up in June if they opt for conversion of warrants.

The Lupin scrip, which had been hovering around the Rs 128 mark on April 23, moved further down to touch Rs 108 on April 30. On May 12 and 13, the stock closed the day at Rs 111.80 and Rs 105 respectively, but commenced its upward movement on May 19 to end the day at Rs 121.90.

Since May 20, the stock was hovering at the Rs 129.90 level till May 22, and touched the Rs 142 mark on May 25, up by Rs 7 over the day’s opening price. On May 26, the scrip closed the day at Rs 157. Analysts say that the bullishness on the scrip could also partly be attributed to the immense potential the company’scephalosporins range offers. Cephalosporins accounted for almost 40 per cent of Lupin’s export turnover of Rs 200 crore.

Lupin, with around 30 anti-TB products and packs, controls 41 per cent of the domestic market while Swiss multinational, Novartis, at second position accounts for 11 per cent. According to a Merrill Lynch study, having recognised the writing on wall early enough, Indian pharma companies have been focussing on the growing global generics market. Besides, companies have been developing formulation export markets for the past few years and sales to these markets are likely to drive their future growth.