Exclusive | How Lupin plans to counter dwindling sales growth in Japan

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26 Aug, 2025 12:21

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Lupin may have to settle for only a 4-5 percent sales growth in Japan in the current financial year, as the government there is pushing for steep price cuts and embracing generic substitution to stem the rising healthcare costs of a burgeoning ageing population.

Generic substitution involves substituting a particular brand of drug prescribed by the physician with either an unbranded one or a different one with same chemical composition.

In the year ended March, Lupin's Japan sales grew 23 percent on a constant currency basis.

Japan is the third largest market for Lupin after the US and India and contributed about 13 percent or (Rs 2,054 crore) to its Rs 15,804.1 crore global revenues in FY18.

“This is going to be a flat market,” said Fabrice Egros, President of Asia Pacific and Japan at Lupin in an exclusive telephonic interview to Moneycontrol from Tokyo. He expects pricing pressure in Japan to remain for a few more years.

Japan aims for 80 percent genericisation of its drug market by 2020 and according to Egros, there is already a 70 percent generic substitution.

Japan reviews the prices of drugs every two years. In April this year, the government pushed drug makers across the board to cut prices by 20 percent.

Lupin entered Japan with the acquisition of local drug company Kyowa Pharmaceutical in 2007. Within a decade it emerged as the sixth largest generic drug maker in Japan. Meanwhile, its Indian peers struggled to crack the highly-regulated and brand conscious East Asian market, which stands third only to the US and China with a size of little over $110 billion.

But the Japanese market has hit stagnation and in fact, has started shrinking.

The trouble for Lupin in Japan comes at a time when its US business is going through a difficult phase, with lack of significant approvals and competition to its key products like Methergine used to treat postpartum haemorrhage and metformin franchise, Glumetza and Fortamet. The warning letter on two of its facilities in Goa and Indore is not helping matters in terms of new product approvals.

Mitigation strategy

To counter the price erosion, Lupin is considering various options to rationalise costs. These include shifting a major part of its production from Japan to India. The company had built a formulation plant in Goa a few years back specifically catering to the Japanese market. The company is also trying to rejig its sales force, as unlike the branded market, generics substitution market may not need a large sales force.

The other strategy Egros said is to focus on products covered under price protection. There are still around 500 listed products, that do not fall under the category of price controls. Here the company is banking on its acquisition of a select brand portfolio from Shionogi & Co to bail them out.

The company bought a portfolio of 21 generic brands from the Osaka-based company paying $150 million two years ago. It is also looking at in-licensing deals to distribute speciality and complex drugs in central nervous system and neurology segments.

Lupin in-licensed and launched Bipresso, a speciality brand from Astellas for the treatment of bipolar depression last year. The drug is a top-selling one for Lupin in Japan.

It is also betting big on biosimilars. Lupin had already filed for biosimilar Etancerpt in Japan in joint-venture with Yoshindo (YLB) and expects approval by end of this year. The company has tied up with Nichi-Iko to market the drug in the Japanese market.

We will continue to sell generics in Japan, that’s our strength. But our plan is to increase revenues from non-generic drugs to about 40 percent, from 20 percent in near future, Egros said.

Focus on non-Japanese markets

The company said it’s focusing on non-Japanese Asia-Pacific markets such as Australia and South East Asia to compensate for the dip in Japanese growth.

Asia Pacific (APAC) as a block, excluding Japan, contributed 7 percent to Lupin sales.

In Australia – Egros said Lupin turned around its loss-making business, which is now growing by 28 percent, outperforming the market. The company expects its Australian business to maintain the growth trajectory. Australian pharmaceutical market was valued at $13 billion in 2017 with generics accounting for over 30 percent of the sales volume.

Lupin now plans to strengthen its presence in the Philippines and expand in Malaysia, Thailand and Myanmar through more launches. It is also exploring ways to enter China.

Egros said the plan is to generate $100 million sales from non-Japanese APAC markets.