Lupin to hold R&D cost over next few qtrs

Lupin Labs has declared its first quarter numbers of FY09. Its consolidated net profit of Rs 112 crore for the quarter ended June 2008 as against Rs 55.9 crore in same quarter of last year.

Consolidated net sales went up at Rs 862.3 crore from Rs 575.7 crore (YoY).

Excerpts from CNBC-TV18's exclusive interview with Kamal K Sharma:

Q: Your operating margins have come in at 20% versus about 14%. This is a significant jump. Where has the growth come in from and can you sustain the margins at this level for the next few quarters as well?

A: We will certainly sustain the margins. In fact, we had committed earlier that we are working towards improving the margins and we have gone systematically in terms of improving the quality of the business as well as controlling costs despite pressures to contrary.

As far as growth is concerned, we have grown 49% on corresponding quarter and the topline and 100% on the profit after tax (PAT).

Q: How much is Kyowa contributed to this growth?

A: Kyowa has contributed about USD 19 million dollars.

Q: From your press release, I can read that Kyowa has clocked net sales of Rs 92 crore, which is higher than expectations. But what has the contribution been in the net profit front in rupee terms?

A: It is about Rs 8 crore.

Q: You had launched Ramipril in this quarter, but you did not have the exclusivity on this one. But what is the market share that you have clocked now and how many players are you competing with?

A: At the moment there are about 5-6 players but when we launched, we were the only second generic player at that time because we had filed a Para IV against one of the recent patents of King Pharma and then when we got approval, we were going to launch.

King Pharma tried to bring a temporary restricting order against us, which denied to them in court on the June 10. So when we launched, we were really the second generic.

Q: So how much market share did you have in this quarter? May be in the next quarter or so, your market share would come down because as you said that more players have now entered. But in this quarter, you must have had the significant market share?

A: Yes, we had a market share of probably in excess of 45%.

Q: How much has the price erosion that you are witnessing right now on Ramipril been?

A: I don't have the latest figures but after about 10-days of our launching, the other guys also got approvals, so can give you that some time later.

Q: Since regulated markets are important for you, how much has your US and other regulated markets grown in this quarter?

A: We have got fantastic growth. We grew 66% in advance markets in the last corresponding quarter and advance markets of just the Europe and US contribute about 31% to out topline.          

Q: How about emerging markets? How much has been your growth in the emerging markets front as well and how many new geographies are you targeting?

A: The growth in emerging markets has been in the range of about 21-22%. I cannot share the geography that we are targeting. We are present in CIS; we are present in Asia-Pacific and in Africa. There are a couple of other geographies that are on the strategic map for onshore presence there.

Q: In terms of R&D can you guide us as to how much has your R&D expense been as a percentage of sales?

A: It is about 6% because the topline has grown at 49%. So in absolute terms against Rs 35 crore in the last quarter, this quarter is about Rs 41 crore.

Q: Would you be able to maintain it at 6% for the entire year?

A: It could be around 6%. We hope that our topline will record handsome growth.

Q: Should we expect any outlicensing deals from you in the coming quarters?

A: We are working on it, but we cannot predict.