By George Smith Alexander - Jul 18, 2011
Lupin Ltd. (LPC), the world’s largest maker of drugs to fight tuberculosis, is considering selling its Indian pharmaceuticals unit, said two people with knowledge of the matter.
Founding shareholders who own a combined 47 percent of the Mumbai-based company have started the process of finding a buyer for the operations, said the people, who declined to be identified because the discussions are private. The Indian business may be valued at as much as $1 billion, one person said.
Selling the Indian medicines unit, which accounted for 32 percent of Lupin’s 57.1 billion rupees ($1.3 billion) of revenue in the year ended March 31, would help finance investments in more profitable markets overseas. Lupin is the fifth-largest supplier of generic drugs in the U.S. based on prescriptions and U.S. sales jumped 27 percent to 20.5 billion rupees last year.
Lupin said it has no plans to sell its domestic operations. “This is baseless and there is no such activity going on,” the company said in an e-mailed response to questions from Bloomberg News on July 15.
India’s pharmaceuticals market will expand by about 14.5 percent annually to reach $55 billion by 2020 from $12.6 billion in 2009, according to McKinsey & Co. By the start of the next decade, India’s drug sales will be the largest after the U.S., Japan and China, helped by rising household incomes, population growth, improved health insurance coverage and increased prevalence of diseases such as cancer and diabetes, according to McKinsey.
India Share
Lupin was founded in 1968 by Chairman Desh Bandhu Gupta, a billionaire father of five with a Master’s degree in chemistry. Lupin had about 4,000 medical sales representatives in the domestic market, according to its 2011 annual report. Gupta and his family control 46.96 percent of the company.
Lupin, India’s fourth-largest drugmaker by revenue, has a 3 percent share of the domestic market, Nomura Financial Advisory and Securities (India) Pte. said last month, making it the 6th largest pharmaceutical supplier in India by value. Cipla Ltd. had the biggest share of the local market, with 5 percent.
Sales at Lupin’s domestic formulations unit increased 17 percent to 15.5 billion rupees in the year ended March 31. The business has focused more on treatments for chronic diseases over the past five years and less on acute conditions, Monica Joshi, a health care analyst with Avendus Securities Pte, wrote in a July 1 report.
Eight of Lupin’s nine manufacturing facilities are in India -- Goa, Tarapur, Ankleshwar, Jammu, Mandideep, Indore, Aurangabad and Vadodara. The ninth is in Sanda, Japan. Three of the plants have been approved by the U.S. Food and Drug Administration for exporting drugs to the country, according to the company’s website.
Top Sellers
Medicines to fight tuberculosis and other bacterial infections accounted for 26 percent of Lupin’s domestic formulation sales, according to the company’s annual report. It also makes gynecological medicines, drugs to treat heart disease, diabetes and asthma.
Tonact, a generic form of Pfizer Inc. (PFE)’s Lipitor, diabetes medicine Gluconorm and blood-pressure pill Ramistar are Lupin’s top-sellers in the domestic market, according to Nomura.
Piramal Healthcare Ltd. (PIHC) sold its branded generic-drug unit in India to Abbott Laboratories (ABT) for $3.72 billion last year. International pharmaceutical companies have made $11.8 billion of acquisitions in the last five years, according to Bloomberg data.
To contact the reporter on this story: George Smith Alexander in Mumbai at galexander11@bloomberg.net
To contact the editors responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net; Jason Gale at j.gale@bloomberg.net
®2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.
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