Lupin Ltd, India's fifth largest pharma company with consolidated net sales of Rs 3,775 crore, is marching ahead strongly by implementing strategic moves, including acquisitions, in the highly regulated and emerging markets. The market price of Lupin scrip crossed Rs 1000 mark on the Bombay Stock Exchange last week and reached at its yearly peak at Rs 1055 on August 26 as against its 52-weeks low of Rs 518 in November 2008.
The scrip moved up steadily during past several weeks on account of strong financial performance, R&D efforts, focus on biotechnology, strategic partnerships and aggressive entry into new geographies. The promoters are holding 50.44 per cent equity stake, foreign financial institutions 12.15 per cent, Mutual funds 15.66 per cent and Insurance companies 9.12 per cent. General public is holding 9.47 per cent of equity capital as at the end of June 2009.
Lupin acquired companies in Germany, Australia, South Africa and Philippines during 2008-09 and now looking for more in certain markets to achieve organic growth in the coming years. The company established brand image in highly regulated markets like US, Europe and Japan with the help of its R&D capabilities.
The company posted impressive performance during the first quarter ended June 2009 and its net profit moved up by 25.1 per cent to Rs 140.11 crore from Rs 112.04 crore in the corresponding period of last year. The consolidated net sales also increased by 25.9 per cent to Rs 1,086 crore from Rs 862 crore. With better profit level, its earnings per share worked out to Rs 16.91 as against Rs 13.65. The company management rewarded its shareholders with higher dividend of 125 per cent as against 100 per cent in 2007-08.
Formulation sales in advanced market went up by 41 per cent to Rs 486 crore during the first quarter ended June 2009 from Rs 345 crore in the similar period of last year. Sales from these markets contributed 45 per cent of the net sales. Its Japanese subsidiary, Kyowa contributed 12 per cent of the overall revenues with sales jumps by 42 per cent to Rs 131 crore from Rs 92 crore in the last period. Lupin's formulation sales in India contributed 32 per cent to its sales and Indian sales increased by 22 per cent to Rs 344 crore.
While commenting on first quarter performance, Dr Kamal Sharma, managing director, said, "On the back of our strong performance over the last 13 quarters built on innovative market strategies, consistent focus on targeting niche therapy segments and developing difficult-to-make products, Lupin today, has the unique distinction of being the fastest growing company amongst the top 10 players in the generics markets of US, Japan, India and South Africa."
Lupin notched up consolidated net profit growth of 22.9 per cent during the year ended March 2009 to Rs 507.74 crore from Rs 408.25 crore in the previous year. It's consolidated net sales jumped by 39.5 per cent to Rs 3,776 crore from Rs 2,706 crore. The EBDIT moved up by 15.9 per cent to Rs 743.89 crore from Rs 642.30 crore. With sales increasing faster, its net profit as per cent of net sales worked out to 13.3 per cent as against 15.1 per cent in the last year. Similarly return on capital employed remained at 12.1 per cent for 2008-09 and 2007-08.
The company has build up strong reserve position during 2008-09. As against the equity capital of Rs 82.82 crore its reserves stood at Rs 1,342 crore. The investments in new assets during last couple of years pushed its borrowings to Rs 1,223 crore from Rs 1,203 crore. The debt equity ratio worked out to 0.86 for the year 2008-09 as against 0.94 in the preceding year. The gross fixed assets went up by 22.5 per cent to Rs 1,820 crore from Rs 1,486 crore. The company made additional investment of Rs 221 crore in assets and its capital-work-in-progress as at the end of March 2009 reached at Rs 223.97 crore. As at the end of 2008-09, Lupin has 13 subsidiaries and two associated companies.
S Ramesh, president - Finance & Planning pointed out, "Over the last five years, Lupin has registered a robust growth and outperformed its peers and markets the world over clocking a CAGR of over 30 per cent in revenues and 53 per cent in profits - beating both investor and analyst expectations. Within a short span of time, Lupin has scaled up its operations and consolidated its presence across segments as well as geographies."
Lupin is investing huge amounts in R&D to tap future opportunities in highly regulated markets with the help of over 550 scientists. Its R&D expenditure during the year 2008-09 reached at Rs 267 crore from Rs 204 crore in the previous year. This worked out to 7.1 per cent of its consolidated net sales. It developed sound capabilities across the spectrum of its research initiatives. The company filed 28 ANDAs and 11 US DMFs during 2008-09. The cumulative number of ANDA filings reached at 90, with 34 approvals grated by the US FDA. It entered into the niche area of oral contraceptives (OC) and it filed 7 OC ANDAs.
Its R&D activities now focus on Advanced Drug Delivery Systems (ADDS) as future growth driver and invested towards strengthening its ADDS capabilities. Lupin is planning to license its ADDS products to innovator companies. The company has set up facilities in Pune for its Bio-Availability and Bio-Equivalence clinical studies. This R&D centre commenced operations fully during January 2009.
The company has set up Biotech facility also and it has seven proteins in different stages of development at the end of 2008-09. Now it is exploring collaborative opportunities in the field of New Biological Formulations and New Biological Entities.
During 2008-09, Lupin acquired Hormosan Pharma GmbH in Germany, Generic Healthy Pty Ltd in Australia, Pharma Dynamics in South Africa and Multicare Pharmaceuticals Inc in Philippines. The company integrated these acquisitions to reduce the cost. Hormosan won the first tender in the German market for supplying Setraline in all 5 regions of Germany covering all Allglemeine Ortskrankenkassen (AOK) insured persons. Its acquisition of Kyowa during 2007-08 in Japan is also achieved impressive performance. These acquisitions will play important roll in the coming year.
"Our growth will be driven by increased generics adoption in the largest pharma markets of the world, namely the US, EU and Japan, as also other emerging markets. All of these combined will help us maintain our current status as the Indian generics player with the highest per-product-revenue and margins in most markets globally, propelled by our strong research capabilities and backed up by a strong backward integrated business model and superior manufacturing prowess that gives us unbeatable cost-leadership over all our peers," S Ramesh added.
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