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Apr 16, 2013, 04.36 PM IST | Source: CNBC-TV18

Contraceptives basket can fetch $150m from US sales: Lupin

Pharma major Lupin expects sales in the US to touch at least USD 150 million per quarter going ahead, S Ramesh, CFO, said on Tuesday.

Pharma major Lupin expects sales in the US to touch at least USD 150 million per quarter going ahead, S Ramesh, CFO, said on Tuesday.

"We crossed the USD 500 million mark in America, last fiscal. So, we believe that going forward we will be looking at close to about USD 150 million per quarter when it comes to sales in America, at the very least," he told CNBC-TV18 in an interaction.

Oral contraceptives could alone contribute USD 125-150 million going ahead, he believes.

Currently, Lupin has 11 oral contraceptives approved by the US Food and Drugs Administration and it has so far launched 8 products in the US market. Seasonique will be Lupin's ninth launch in the US.

Below is the edited transcript of Ramesh's interview to CNBC-TV18.

Q: How big is the drug Daysee in the US? How much do you expect to garner by market share and by revenues once you launch this drug?

A: Seasonique (belongs to Teva for which Lupin got generic rights)  sales are about USD 150 million. Teva has got the rights for it. We believe that given our track record in markets, we would get about 25-30 percent when we actually launch it. Currently, we have about 11 approvals on the oral contraceptive (OCs) front and we got about eight products in the market already. So, it would be the ninth launch when we actually do that. We believe that the OCs market for us would be a good USD 100 million this year and going forward, it would be about USD 125-150 million.

Q: Given to understand that there are some liability claims as well in this product, would you still go ahead and launch?

A: We always weigh our overall risk whenever we launch a product, so it is a calibrated risk taking endeavour for us. It has been present in the past as well. So, when we launch a product, we are fairly confident about the risk, the pros and cons leading to that.

Q: So you are launching it?

A: I am not committing to anything. I am only saying that when we launch it, we would have actually calibrated our risk associated with it.

Q: What about the total US business itself? How did it play out in FY13 and how does it look in FY14?

A: Last year was a particularly a good year for us. Infact if you look at the first three quarter results, we grew well over 38 percent in terms of top-line. If one looks at the US markets, we grew at around 49 percent and that is despite the fact that we didn’t actually add to any numbers. If you look at the generics, we actually did particularly well. Infact, we had quite a few good launches. We started off the year with Ziprasidone, then we had Fortamet and towards the end of the year, we actually had Tricor and so on. So, we found the overall generic market in US to be pretty buoyant. It is not as though the brands portfolio took a beating or anything of that kind. Infact Suprax, our mainstay there did particularly well, though we did find some Antara going up because of generic competition entering towards end of the year, fiscal.

Q: You recently got the US Food and Drug Administration (USFDA) nod for a hypertension drug as well in the month of March. I was just going through your Q3 portfolio in the US, generic sales of USD 48 million. What’s the kind of run rate that the market can expect going forward from say Q1 of this financial year in terms of generic sales?

A: Infact, we crossed the USD 500 million mark in America, last fiscal. So, we believe that going forward, we will be looking at close to about USD 150 million per quarter when it comes to sales in America, at the very least.

Q: To come back to antidote for cigarettes, generally how is domestic formulations business doing? How was the FY13 performance and what have you up your sleeve in FY14?

A: If you look at the pharmaceutical, the healthcare sector in India or for that matter in other parts of the world, it generally follows the gross domestic product (GDP) growth itself. It grows at around twice the pace of the GDP and with the dips in the GDP growth you would expect that to happen in the healthcare sector as well. That has happened in India. So, there has been some slight dip in terms of overall performance of the healthcare sector, the pharmaceutical industry. It is going to be temporary. In the long-term, this will get corrected. If you look at our growth, it has been about 18 percent in the first nine months. We expect to do particularly well in the Q4 and we have done pretty well. Our growth rate for the next two to three years should be between 15-20 percent. So, it is business as usual as far as we are concerned.

Q: What percentage of your money comes from non-domestic, non-US business? Is there anything significant that you have planned for FY14?

A: We have pretty interesting markets across the globe, Japan now constitutes close to about 15 percent of our business, and we have been growing at around 14-15 percent out there.

South Africa too has a pretty good business for us. It has been doing about 35 percent Compounded Annual Growth rate (CAGR) in the last five to six years. Australia has been doing pretty well. We have been growing at around 15-16 percent out there. So, there are interesting markets across the world and we have been doing particularly well.

The good thing about Lupin is that infact, our growth has been secular. It has not been restricted to America or India, it has been across various markets.

Q: So, you get some sweetener in your profit this time in terms of an other income because of the yen depreciation?

A: We would actually have an hit because of the yen depreciation because if you translate it back into rupees, it would actually impact your overall profits. But despite that, we have still done particularly well.

Q: In Q3, you surprised the street with margins. A 300 basis point (bps) jump, is that sustainable or was that a one-off?

A: Q3 was also impacted favourably because we brought in Tricor. We have been working on our overall margins itself and if you look at the last five years, we have grown from about 15 percent to well over 22-23 percent now. So, it is not as though it follows a straight-line approach, it is staggered. It is kind of going up over a period of two to three quarters. It is sustainable. We have been working on yield improvement as well as throughout to manage our cost. We see that improving over the next couple of years again.

Lupin stock price

On July 23, 2014, Lupin closed at Rs 1090.80, down Rs 4.75, or 0.43 percent. The 52-week high of the share was Rs 1110.00 and the 52-week low was Rs 742.30.


The company's trailing 12-month (TTM) EPS was at Rs 51.82 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 21.05. The latest book value of the company is Rs 155.59 per share. At current value, the price-to-book value of the company is 7.01.

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