Days after Lupin’s shares took a beating over earnings concerns, the company has reported very healthy numbers for the December quarter. The company has reported a growth of 53.4 percent in its US formulations business and a net profit growth of 21.7 percent in the third quarter of FY17. In an exclusive interview with Moneycontrol’s Malini Bhupta, Lupin’s CEO Vinita Gupta says the next year will be good thanks to 25 new product launches.
US formulations business has grown at over 53.4 percent in Q3 quarter. Does it mean that growth pangs in US are over?
From our perspective, we have a very strong pipeline of products. We plan to launch 25-plus products out of India and Somerset, New Jersey next year. The investments made over the last couple of years has put us in a good place. We have made significant progress on inhalers. We have also filed our first metered dose inhaler (MDI) Albuterol, which is a complex product. We have multiple inhalation products lined up in the pipeline. We have made significant progress on biosimilar Etanercept and is in Phase III trial. And of the 25 + products we plan to launch next year, 14 products have already been approved.
What about launches in the near-term?
In the near-term we have decent-sized launches lined up like Minastrin (for birth control) for which we will have exclusivity period to market it. And, by the end of next month, we will launch Epzicom (HIV drug), which has limited number of competitors. That would be a good way to start the new fiscal year. Last quarter, we had the facility up and running and are ramping up manufacturing facility in Somerset, New Jersey. We have launched five [drugs] there and expect to launch two more in FY17.
Do you expect to grow at the same pace in the coming quarters?
The number of launches lined up for next year are very healthy. From a long-term perspective, we have a good pipeline for complex generics and biosimilars, which include some products with limited competition and exclusivity periods so that should help us.
Analysts expect the launch of the Valeant’s authorised generic version of Glumetza to hit your earnings by 20 percent. Do you agree?
Valeant had 25 percent of market and we have 75 percent of the market for Glumteza. We expect the market will genericize to 95 percent. We will end up giving up some share, but expect it to hold on to a major share of the market. In the near-term, we have a good base. But we will have some erosion on that front in the near-term. Glumetza will be a significant contributor to earnings in FY18. We believe Valeant will expand the market.
What if Sun launches too?
We think they will launch at some point. We have assumed both Sun and Teva will launch in FY18.
Can you give details of what has driven US growth in this quarter and is kind of growth sustainable?
We have a good number of products that people know of. We can see growth momentum continue in medium-term and can grow in double-digits. Double-digit growth is sustainable in the medium- to long-term but not on a quarterly basis. We have been very fortunate to have upsides from Glumetza and unless we launch a number of new meaningful products we cannot say that in the near term we will have double-digit growth.
How much of a risk you think the industry faces from Trump’s politics and the possibility of an import tax?
We have made significant investments in production and research and development facilities in the US. We have also created a lot of jobs in US in Somerset. I think most of the comments are directed at the Big Pharma and we believe the generics industry is the solution. Our manufacturing presence in New Jersey gives us an advantage in case of a challenge.
What about other markets and growth in other markets?
If you look at our three major markets – India can see double-digit growth. Japan has been muted but we see a significant growth over the next few years and we expect 12 months to be healthy. In Latam we expect double-digit growth in next 12 months.
What could pose risks to your business?
A lot of the unknowns in the US and where the tax reform will take us. That is a risk and what happens in the US and the rest of the world will see forex volatility. The risks are more to do with macro-economic factors than business fundamentals. In all the markets we have been able to overcome them, despite the FDA challenges.
What about your operating margins? Do you expect them to sustain at these levels?
Operating margin will be at 27-28 percent and will remain there next year too.
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