Pharma tycoons climb as stocks zoom

 

Over a dozen people from pharmaceuticals and healthcare industry made it to the Forbes list of India's 100 Richest People.

Apart from the second richest Indian Dilip Shanghvi of Sun Pharmaceutical Industries (net worth $18 billion), the list includes vaccine king Cyrus Poonawala (net worth $7.9 billion) who owns Serum Institute of India, who made it to the top ten, Desh Bandhu Gupta (net worth of $5.9 billion) of Lupin, Pankaj Patel ($4.1 billion) of Cadila Healthcare, Yusuf Hamied ($3 billion) of Cipla, PV Ramprasad Reddy ($2.8 billion) of Aurobindo Pharma, Reddy Family ($2.6 billion) of Dr Reddy's Laboratories, Samprada Singh ($2 billion of Alkem Laboratories) and Glenn Saldanha ($2 billion) of Glenmark.

 

Forbes in its list said Dilip Shanghvi's wealth flatlined as Sun Pharma reported a 46% drop in net profit due to merger costs linked to acquisition of rival Ranbaxy Industries.

The list of 100 people also saw Leena Tiwari of USV Pharma, Mannalal Agarwal of Ajanta Pharma and Chirayu Amin of Alembic Pharmaceuticals making an entry with net worths of $1.9 billion, $1.4 billion and $1.2 billion, respectively.

Both Mannalal Agrawal and Chirayu Amin debut on list after shares of Ajanta Pharma more than doubled in the past year, while that of Alembic Pharmaceuticals rose 66% in the past 12 months on the back of higher revenues and profits.

The list includes Rajendra Agarwal of Macleod's Pharmaceuticals, Habil Khorakiwala of Wockhardt, Ajay Piramal of Piramal Enterprises, Malvinder and Shivinder Singh of Fortis, all with net worths of $1.8 billion. It also lists B R Shetty ($1.7 billion) of UAE-based NMC Healthcare, Dilip and Anand Surana ($1.6 billion) of Micro Labs, Ramesh Juneja ($1.5 billion) of Mankind Pharma and Azad Moopen ($1.5 billion) of Aster DM Healthcare.

Sun Pharma arm suffers US jolt

 

In a setback to Sun Pharma Advanced Research Company (SPARC), the US Food and Drug Administration (USFDA) has revoked an approval for its anti-epileptic drug because of manufacturing quality concerns at the Halol plant of Sun Pharmaceutical Industries.

SPARC is the research & development arm of Sun Pharma and it has plans to manufacture the drug at the Halol facility. It may be recalled that the US drug regulator had earlier observed certain current good manufacturing practices (cGMP) deviations at the unit.

SPARC had received a final approval from the USFDA in March this year for the product and it was evaluating several marketing partners for the product.

However, in a communication to the bourses today, the company said that the US drug regulator has issued a complete response letter to its new drug application for the anti-epileptic drug, indicated for adjunctive therapy in the treatment of partial onset seizures in patients 12 years of age and older with epilepsy.

"SPARC has now received a letter from the USFDA rescinding its earlier approval, citing that the compliance status of the manufacturing facility was not acceptable on the date of approval,'' it said.

Under the USFDA website, complete response letters are issued when communicating a decision to a drug company that its new drug application or abbreviated new drug application to market a new or generic drug will not be approved in its present form.

SPARC said Sun Pharma is working with USFDA in resolving the cGMP deviations at the facility and has taken several corrective measures.

In a presentation this June, SPARC had said that the market for the drug in the US is at 720 million units and is growing at 5 year compounded annual growth rate (CAGR) of 9 per cent. It had forecast that opportunity exists to market Elepsia XR at significant premium to generics. Commercialisation of the drug in the US market was slated in the second half of this fiscal.

Under new regulations, USFDA's Center for Drug Evaluation and Research (CDER) no longer issues "approvable" or "not approvable" letters when a drug application is not approved. Instead, CDER issues a "complete response" letter at the end of the review period to let a drug company know of the agency's decision on the application.

Glenmark to focus on dermatology medication

Mumbai-based Glenmark Pharmaceuticals Ltd will focus on developing medications for ailments relating to cardiology, dermatology and respiratory conditions.

Speaking on the sidelines of the launch of Diabetes treatment drugs using Teneligliptin-based drugs Ziten and Zita Plus, Sujesh Vasudevan, President and Head – India Business, Glenmark Pharmaceuticals, said dermatology is one of the fastest-growing areas as more people are giving importance to beauty and wellness.

“Though the products are sold based on prescription, people are increasingly opting for dermatology and cosmetology clinics because of the trust factor in the doctors rather than over-the-counter beauty products,” Vasudevan said.

The company will also be launching Teneligliptin and Metformin combination product, which is currently under clinical trials at 30 centres.

Glenmark expecting USFDA nod for 4-6 products this fiscal

Glenmark Pharmaceuticals is expecting approvals for four to six new products during the fiscal from the US Food and Drug Administration (USFDA), a senior official said on Monday. 

We are expecting approvals for 4-6 products from the USFDA during this year," Glenmark Pharmaceuticals President and Head-India Business Sujesh Vasudevan told reporters here on the sidelines of launch of Teneligliptin in Telangana. The company had already got approvals for eight products this year, he added. Teneligliptin, a new third generation oral anti-diabetic agent, is used for the management of Type 2 Diabetes Mellitus. Glenmark has launched this molecule under two brands, Ziten and Zita Plus, at Rs 19.90 per tablet. "The launch of these two products will lower the daily cost of treatment for a diabetes patient on Gliptin therapy by approximately 55 percent," Vasudevan said. Glenmark's diabetes segment is valued at around Rs 100 crore, Vasudevan said, adding it is growing at 20 percent per annum. Reacting to a query, he said, "The capex for this year is Rs 600 crore and majority of this will go for the plant in the US."

Glenmark to launch 10-12 new products in India, eyes 18-20 per cent growth

Mumbai headquartered drug firm Glenmark Pharmaceuticals proposes to launch 10-12 new products in the domestic market during the current financial year (2015-16) and hopes to report a growth of 18-20 per cent, said a top official. 

The Rs 6,600 crore firm in revenues last fiscal, earns over a fourth of revenues from the domestic market, mostly focusing on dermatology and diabetes drugs. The company may also look at acquiring brands or companies aimed at strengthening its market share in t .. 

We are going to launch 10-12 new products in India this year. We have already launched 4 products so far. New product launches would help us maintaining the high growth rate at around 18-20 per cent when the industry is growing at about 12 per cent", said Vasudevan while addressing journalists in Hyderabad on Monday on the eve of launching new oral drug Teneligliptin for type-2 diabetes. 

Glenmark, which currently earns around Rs 100 crore from the diabetes segment with a year on year growth of around 20 per cent, is planning to grow significantly with the help of new product launches going forward. 

"Our new combination drug of tenegliptin and metformin is under clinical trials now. We will launch this product once we get the approvals from the authorities", said Sujesh. 

He said the domestic diabetes drugs market is currently estimated at around Rs 6,600 crore and gliptins account for around Rs 1,200 crore. 

Neutral rating on Cipla, Sun Pharma no game changer: Sarabjit Kour Nangra, Angel Broking, Pharma

In an interview with ET Now, Sarabjit Kour Nangra, VP - Research, Angel Broking, Pharma, shares his views on markets. Excerpts: 

ET Now: What is that you have made of the USFDA approval for Lupin for a drug of the Goa plant and does Lupin become a buy right now? 

Sarabjit Kour Nangra: This is definitely positive because we expect that Goa facility is not a big issue. It is just a few observations which have come in and we believe that  that it is positive because it indicates that probably they will overcome it. We have a neutral rating on the stock. We do not think the current valuations justify a buy rating on the stock. 

ET Now: What about Sun Pharma, do you think these two product approvals that they have got, how big an opportunity are those for Sun Pharma? 

Sarabjit Kour Nangra: It is a good opportunity in the sense it is a specialised generic, nonetheless it is a generic because the product is already generic and there are various copies available to the product, but since it is a variation, it is in a capsule form, most of the oral products are equivalent available  in the branded and generic market are in the form of tablets, so this is a capsule with a higher dosage. 

So, for the Sun PharmaBSE 0.28 % given its competitive edge and given the efficacy of the product, it can easily do 80 to 50 million on a conservative basis to begin with and then scale up the product. As of now, it is not a game changer but it can be as the product scales up over a period of years. So, it is good news and the ANDA approval that they have got is also of decent size  o it will add to the company but since the company is so big that such small approvals do not add significantly. 

source: http://economictimes.indiatimes.com/articleshow/48556552.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.. 

Sun Pharma, Lupin Surge on New Drug Approval

Sun Pharma and Lupin shares surged on Thursday in an otherwise weak market after both the companies got approval for new drugs from the US Food and Drug Administration (USFDA). The new drug approvals for Sun Pharma and Lupin can offer millions of dollars in revenues to these companies.

Lupin has received approval from the US FDA for Fenofibrate tablets in dosages of 160 mg and 54 mg, which is used to reduce cholesterol level in human body and reduce risk of cardiovascular disease.

Analysts say, total annual revenues expected from the drug is about $154 million and the competition in this drug is limited to only three generic players.

Lupin has got approval to manufacture the drug from its Goa plant, which had got Form 483 (observation letter) from the USFDA in July. However, this approval indicates that observations at Goa plant are not disruptive and pushed its shares as much as 8.1 per cent higher.

Similarly, Sun Pharma shares advanced over 4 per cent after the pharma major received approval for generic drug Xenazine, which is used for treatment of acne.

Analysts say the market for Xenazine is around $319 million annually and Sun Pharma can expect sales of $6-7 million per month from this drug. Sun Pharma expects to launch this product in last quarter of 2015.

Lupin shares closed 5.30 per cent higher at Rs 1,890.55 and Sun Pharma shares ended 0.91 per cent higher at Rs 935.65 apiece, compared to 1.44 per cent loss in the broader Nifty.

Lupin's appetite for growth

It’s always a tough call for companies to decide on the need—or otherwise—for an acquisitions-led growth strategy. Oftentimes one has seen business owners examining the pros and cons of potential acquisitions and then going back to an organic growth strategy, keeping in mind current compulsions, cash flows and the impact an acquisition could have on the balance sheet. In this context, Lupin Ltd’s recent, and aggressive, acquisitions-driven growth recipe deserves special attention. The company, founded by Desh Bandhu Gupta in the ’60s, is India’s third largest pharma company by sales, and the next generation of the Gupta family—CEO Vinita and MD Nilesh—are currently busy implementing what is arguably one of the more aggressive buyouts-driven growth plans seen in the pharma sector. The target the two have set for themselves is daunting: A $5 billion turnover by FY2018. In rupee terms, it means the company will have to vault from a current turnover level of Rs 12,600 crore to Rs 31,875 crore in three years. And Lupin realises that if this has to happen, acquisitions would have to be an integral part of the company’s plans.

The first big steps have already been taken in that direction. The company announced three important buys in July, which includes a hefty $880 million one of Gavis, an American generic drug maker, which has become the largest acquisition by an Indian pharma company, bigger than the Dr Reddy’s-Betapharm deal of over $560 million in 2006. The Gavis acquisition will provide Lupin a stronger foothold in the American market, which accounts for 45 percent of Lupin’s FY15 revenues, apart from bulking up its portfolio with specialised products. 

The Gavis buy, as Associate Editor Aveek Datta writes in the cover story, is an important piece of a broader ‘string of pearls’ strategy drawn up by the pharma major, whereby smaller companies will provide flanking support by way of a mix of specialised products, new markets and technologies. Not surprising then that the Guptas are already talking of further acquisitions to the tune of another $500-700 million over the next year. That the buyouts strategy has gathered serious momentum is also borne out by the fact that half of the 12 companies Lupin has acquired thus far have been bought over the past year-and-a-half. The strategy seems to have pleased shareholders, particularly billionaire investor Rakesh Jhunjhunwala, who has given the Guptas a firm thumbs-up.

This issue also brings you the coveted Forbes list of America’s Top 200 Colleges. The listing and the stories show that colleges and universities in the US are increasingly focusing on providing greater value to students, given the steep cost of higher education. And importantly, many are proving to be excellent launchpads for the next generation of entrepreneurs.

Source: 

http://forbesindia.com/column/column/lupins-appetite-for-growth/40931/1#ixzz3jeHEgN1Q

Glenmark receives USFDA nod for oral contraceptive drug

Glenmark Pharmaceuticals today said it has received final approval from the US health regulator to sell oral contraceptive -- drospirenone and ethinyl estradiol tablets -- in the US market.

"Glenmark Pharmaceuticals Inc., USA has been granted final approval by the United States Food & Drug Administration (USFDA) for Drospirenone and Ethinyl Estradiol tablets USP, 3 mg/0.02 mg," the company said in a BSE filing.

The product is generic version Bayer's Yaz tablets.

Glenmark said it plans to commence shipping of drospirenone and ethinyl Estradiol tablets immediately.

Citing IMS Health sales data, the company said for the 12 months period ending June, "The Yaz market achieved annual sales of approximately $170.1 million".

Glenmark's shares were trading at Rs 1,213.65 apiece, up 4.62% from their previous close on BSE.

Lupin pharmaceutical firm opens research center in Broward

A pharmaceutical firm from India opened a $13 million facility in Coral Springs, where it plans to create 45 jobs.

 

Mumbai, India-based Pharma Major Lupin received a $315,000 public incentive package in a deal with local officials and the state after working with the Greater Fort Lauderdale Alliance, the Florida Department of Economic Opportunity and Enterprise Florida. The company will conduct research and development work in Coral Springs for inhalation products to treat asthma, allergic rhinitis and chronic obstructive pulmonary diseases.

“We are delighted to be making our mark in South Florida,” Lupin CEO Vinita Gupta said. “With the talent and resources this state provides, our Coral Springs expansion will further strengthen our ability to bring quality, affordable pharmaceuticals to patients in the United States and other key markets globally. The new inhalation research and development facility is a significant step forward in our journey to emerge as a global specialty pharmaceutical player.”

Lupin is the sixth-largest generic drug manufacturer in the U.S. mart, according to IMS Health. It’s U.S. headquarters is in Baltimore. It has a pending deal to acquire New Jersey-based Gavis.

 

Source: http://www.bizjournals.com/southflorida/news/2015/08/10/lupin-pharmaceutical-firm-opens-research-center.html

Sun Pharma Q1 profit tanks 46% on Ranbaxy integration cost

Revenue met expectations, growing 10 percent to Rs 6,767.6 crore in June quarter compared to Rs 6,157 crore in March quarter.

Drug major Sun Pharmaceutical Industries  ' first quarter consolidated net profit disappointed street on Tuesday, down 46 percent quarter-on-quarter (down 60.2 percent year-on-year) to Rs 479 crore. The bottomline was impacted by exceptional loss, higher tax expenses and lower other income.

Revenue met expectations, growing 10 percent (up 6.7 percent on yearly basis) to Rs 6,767.6 crore in June quarter compared to Rs 6,157 crore in March quarter. Profit was estimated at Rs 894 crore on revenue of Rs 6,262 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18. Sun Pharma said net profit for the quarter was adversely impacted by one-time items related to restructuring as well as exceptional charges of Rs 685 crore. These exceptional charges related to impairment of fixed assets and goodwill and other related costs and have arisen on account of Ranbaxy integration and optimisation measures, it added. In fact, the country's largest drug maker already issued profit warning (on July 20), saying FY16 revenue will remain flat or record marginal decline compared to FY15. Hence, profit may also be adversely impacted due to certain expenses/charges arising out of Ranbaxy integration as well as remedial actions, it added.

In fact, the country's largest drug maker already issued profit warning (on July 20), saying FY16 revenue will remain flat or record marginal decline compared to FY15. Hence, profit may also be adversely impacted due to certain expenses/charges arising out of Ranbaxy integration as well as remedial actions, it added. Branded generic sales in India (which contributes 27 percent to total sales) increased by 11 percent year-on-year to Rs 1,784 crore.

However, US finished dosage sales fell 4 percent to USD 488 million, impacted primarily due to competitive pressure on some products and temporary supply constraints arising from remediation efforts at the Halol facility. Its US subsidiary Taro Pharma registered a 125.2 percent growth in net profit at USD 103.6 million and a 65 percent growth in revenue at USD 215 million year-on-year. However, its sales volume declined 10 percent as a result of increase in competitor activity in the US. "We remain cautious of the ever-increasing pressure on business from strong competition and the continuing industry and customer consolidations," said Kal Sundaram, Taro’s CEO on August 7. Sun's emerging markets sales dropped 15 percent on yearly basis to USD 133 million due to volatile currency movements in certain emerging markets and a strategic decision of not participating in low margin businesses. Rest of World sales declined 7 percent to USD 91 million year-on-year. Research and development investments stood at Rs 511 crore for the quarter, an increase of 37 percent over Q1 last year. This included significant investments on account of funding the clinical development of MK-3222, the IL-23 monoclonal anti-body in-licensed from MSD (US), said Sun.

Other income fell 72.4 percent to Rs 105.4 crore from Rs 382.5 crore on sequential basis. Consolidated tax expenses for the quarter were Rs 226.8 crore against tax write-back of Rs Rs 600 crore in previous quarter.

"After the management's guidance [that its revenues would be flat for the year], the focus is on EBITDA, which is good," Sarabjit Kaur-Nangra of Angel Broking told CNBC-TV18. "But the numbers on the top line are better than our expectations."

Operational performance was ahead of expectations. Consolidated operating profit (earnings before interest, tax, depreciation and amortisation) shot up 108.4 percent sequentially (down 4 percent year-on-year) to Rs 1,859.7 crore and margin expanded by 1300 basis points (down 310 bps year-on-year) to 27.5 percent in June quarter. Analysts were expecting operating profit at Rs 1,504 crore and margin at 24 percent for the quarter.

What Indian pharma research must learn from Sun Pharma's Glaucoma drug experience

Glaucoma is a health condition that affects the eye. It needs urgent attention and lifelong care. Left unattended, glaucoma can lead to loss of eyesight. There are no known early symptoms and the best solution is for people over 40 years to have regular eye checkups, though glaucoma could, in some rare cases, affect children too.

According to Glaucoma Society of India, Glaucoma is the third leading cause of blindness in India - 12 million people are affected accounting for 12.8 per cent of the country's blindness.

It is a global problem. In the US, for instance, Glaucoma prevalence is reported at 1.9 per cent of the US population aged 40 or older. That means roughly 2.7 million Americans have Glaucoma.

Such patients have to be put on a dose of eye drops for life much like lifelong medication for patients of diabetes or hypertension. However, most of these eye drops tend to have side effects or other associated problems. This is because most such drops contain a preservative called Benzalkonium Chloride (BAK in quickspeak). Over time, BAK tends to prove harmful to the eye surface. In many cases, it leads to redness in the eye with symptoms like tearing, burning or itching making patients uncomfortable.

Therefore, the trend globally today is to move towards eye drops that are BAK-free. From India, Sun Pharma Advanced Research Company or SPARC has come up with a differentiated product - it is not a generic since SPARC has developed a new technology platform that avoids the use of BAK and has undertaken clinical studies in the US for this.

It has launched a product based on this in India called Letoprost RT. However, it is facing challenges in getting the approval to launch a similar product, Xelpros, in the US market. Fortunately, as one gathers from company statements, these are not about some fundamental issues like the need for new or additional clinical data.

Between December last and August this year, SPARC received two Complete Response Letters or CRLs from the US Food and Drug Administration (USFDA), which in effect means the product application cannot be approved in its current form.

When on December 1, 2014, SPARC announced that the FDA had issued a CRL to its New Drug Application (NDA) for Xelpros, it said: "While the FDA did not seek any additional information for supporting clinical data, it sought additional information on certain labelling and other deficiencies for processing the NDA."

Again on August 1, 2015, it informed the bourses that it had received another CRL to its NDA for Xelpros. What is important, it said, "SPARC submitted a response to an earlier CRL it had received from the USFDA, wherein no additional preclinical or clinical data was required. While the USFDA has accepted the clarifications and changes to the labelling, SPARC has now received another CRL from the USFDA seeking minor changes to the proposed labelling. SPARC hopes to address these requirements soon."

First learning: It is very likely that one is not able to clearly understand what the regulator wants, and that becomes a challenge in itself. Says Anil Raghavan, CEO (R&D) at SPARC: "FDA identifies deficiencies in NDA applications and responds in the form of Complete Response Letters (CRL). The response to a CRL is based on best understanding and interpretation of the queries / comments contained in the CRL. However, FDA has the final say in determining whether a response is adequately addressing queries/comments in a CRL." It is important that Indian pharma companies doing research and seeking product approvals abroad understand this well.

Second learning: having an identical product launched in India gives you no advantage. According to SPARC, Xelpros, the product for which it is seeking approval from the USFDA is no different from Letoprost RT that it has in the Indian market. In other words, having a product in India (despite all the good reasons for a Make-in-India pitch) does not seem to be give any comparative advantage to a company planning to launch a product abroad. And it all just boils down to following the existing norm where every country has to anyway approve each product individually.

Third learning and perhaps a very important one for Indian pharma companies from the SPARC experience is with the manufacturing process that a new R&D product has to fall back on. If we are found wanting in this, even a great product development process will not help. Consider this: In the latest CRL that SPARC got from the FDA. Since the product is to be manufactured at Sun Pharma's Halol facility in Gujarat, SPARC says: "The USFDA has indicated that a satisfactory resolution of the cGMP deficiencies at this facility is a prerequisite for the final approval of Xelpros." The USFDA had observed certain cGMP deviations at this facility of Sun Pharma during the inspection conducted by the regulator in September last year.

On the connect between Sun Pharma and SPARC on this, as many would know, in June this year SPARC licensed out XelprosTM (Latanoprost BAK-free eye drops) to a subsidiary of Sun Pharma for the US market. In addition to up-front payment of $3 million, SPARC will receive certain other milestone payments, both totalling to $16 million from Sun Pharma. It is also eligible for certain defined royalties and additional milestone payments linked to the actual sales of Xelpros

Sun Pharma may file new drug application with USFDA

India's largest drugmaker Sun Pharma  may file application for a new drug with the US Food and Drug Administration in next two to three years, the company's Managing Director Dilip Shanghvi said on Thursday. The firm's research arm SPARC (Sun Pharma Advanced Research Company) is currently working on three new drugs that are currently under clinical trial stage, he added. 

"A few years back, we decided to separate our innovative business in a company called SPARC. That company has now three products undergoing clinical trials. "And hopefully in the next two to three years, we should have our own new product registered in the US," Shanghvi said in his address at Indian School of Business. 

He, however, did not elaborate on the therapeutic areas on which those three chemical entities are under research. The company has around 1,800 research scientists working in multiple R&D centres with expertise in developing generics, difficult to make technology intensive products, Active Pharmaceutical Ingredients (APIs), Novel Drug Delivery Systems (NDDS) and New Chemical Entities (NCEs), according to SPARC's website. The company had earlier said it spends about 6 percent of its revenues on Research and Development. 

JPMorgan to fund Lupin’s $880-million Gavis deal

PMorgan will bankroll Lupin for its $880 million acquisition of Gavis, a New Jersey-based generic drug firm.

The Wall Street bank will act as guarantor till the date of payment, which is some weeks away, and then lend the full deal amount that Lupin will have to repay over a medium term period, said a person who is aware of the transaction

The loan, it's understood, is not backed by hard collateral or claims on future cashflow, but based on pure credit assessment. "Lupin will have enough time to arrange funds to pay off the loan...JP is not holding a gun to their head," said a source.

The acquisition financing arrangement was cobbled together after the seller insisted on a guarantee.

A spokesperson for JP Morgan India declined to comment on the deal while ET's email to a Lupin spokesperson went unanswered till the time of going to press.

On Thursday, Lupin, a Mumbai-based pharmaceutical company, announced that it would take over Gavis, which is run by Veerappan Subramanian.

It would be the biggest outbound transaction in the Indian pharmaceutical industry.

JP Morgan is also the sell side advisor in the deal. "What's unusual is the absence of other bankers and JP writing the cheque for the entire amount which is not small," said a seniior banker.

Two industry sources said that Lupin had placed the bid for Gavis and another UKbased drug firm specializing mainly in dermatological brands, which was also valued at $700-900 million.

Earlier in the year, Lupin's name had cropped up as a bidder for Kremers, the US generic drugs business of Belgian drug firm UCB.

Analysts are divided on the Gavis deal. Being valued at 9 times 2014 sales and 6 times 2015 sales, some feel it's an expensive acquisition.

Indeed, one Mumbai-based investment expert said the deal does not give comfort on the payback time, especially due to a lack of clarity on the potential upsides from the launch pipeline of Gavis. However, another analyst thinks Lupin that has paid full price for a good asset in contrast to some generic peers who typically acquire assets at distress value. "If the margins are sustained at 35% to 40%, we see Gavis to give the right push to Lupin," he said requesting anonymity.

Lupin itself has been a conservative buyer and has not paid a very heavy price for any of its global deals.

On the Gavis deal, Lupin said that it hoped to leverage on at least 50 of the 66 future filings of Gavis to treble revenues by 2017-18. On Friday at the BSE, Lupin stock ended down 3% at Rs 1672.

Lupin acquires specialty portfolio from German company

Temmler Pharma has a specialty portfolio of 13 products including key Central Nervous System (CNS) products

A day after announcing a $880-million acquisition in the US, drug maker Lupin said it will acquire speciality product portfolio from German company Temmler Pharma for an undisclosed amount.

Chief executive Vinita Gupta said Temmler’s business had a “strong strategic fit with Lupin’s Hormosan business in Germany and enables Lupin to bring an enhanced specialty central nervous system (CNS) portfolio to the German market.” Established in 1917, Temmler is a part of Aenova Group, a pharmaceutical contract manufacturer. Hormosan, also a German pharmaceutical company, was acquired by Lupin in 2008.

Based in Marburg, Germany, Temmler has a specialty portfolio of 13 products including key CNS products and specialty products that address rare disease areas like myasthenia gravis, huntington’s disease as well as fast-growing dermatology products for anti-wart treatment.

The announcement came after the close of business hours at the stock exchanges. On Friday, Lupin stock closed at Rs 1,672, down 3.27 per cent from the previous day’s close. This is the second consecutive day of decline in the stock price. On Thursday, the stock lost over five per cent after it announced a 16 per cent drop in consolidated net profit for the June quarter. The Mumbai-headquartered drug maker has lost Rs 6,844 crore of market value between Thursday and Friday owing to a drop of over eight per cent in stock price.

Earlier this week, the country’s biggest pharma company, Sun, lost over Rs 34,000 crore of market value in a day after the company said its profit will be ‘adversely impacted’ due to expenses related to integration with Ranbaxy, a company it acquired last year.     

This is Lupin’s sixth acquisition in 18 months. In February 2014, it had acquired Netherlands-based Nanomi.

A month later, it acquired control of Mexican company Grin. In May, it bought Brazilian company Medquimica Industria Farmaceutica. Earlier this month, Lupin acquired ZAO Bio Biocom in Russia. On Thursday, it announced acquisition of New Jersey-based generic drugs firm GAVIS for $880 million. GAVIS is the largest overseas acquisition 

What took mighty Lupin down!

In an interview to CNBC-TV18, Praful Bohra, VP- Research, Religare said that US business is one of the most profitable markets for Lupin, and seeing a decline there has resulted into overall weak numbers. 

Besides, absence of big bang approvals and Aurobindo Pharmax entry into generic Suprax also impacted Lupin sales, he said. He also feels the price Lupin paid to acquire Gavis is too high. 

Below is the transcript of Praful Bohra's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18. 

Sonia: How to approach Lupin  ? 

A: The numbers were weak. On the operating front - that's largely led by the sequential decline in the US business. However, some part of it would also be driven by the entry of Aurobindo Pharma  in Suprax; I think that would have led to some sequential decline. Having said that I also believe that there would be some erosion in the base business because there were no big bang approvals for Lupin in the last quarter. The US business is one of the most profitable markets for Lupin and that seeing a decline the overall numbers are weak. 

Latha: How are you looking at the Gavis acquisition? Is the price right?  

A: First on the acquisition and what it brings to the table. If you look at the portfolio of Gavis, they have a portfolio of control substances products, dermatology products where Lupin is negligibly present as of now, so that way the acquisition fits. The only thing is the price that they are paying; my sense is it is pretty expensive. So they are paying almost 9x the sales. We have seen such kind of valuations in the past only for domestic acquisitions like Ranbaxy and Abbott 's acquisition of Piramal. I think for US geography this is an expensive acquisition, much higher than what the past acquisitions have been in the range of four-five times sales. So price is one thing which I am concerned about but from a strategic perspective initially this can be return on capital employed (RoCe) dilutive in the medium-term for the company. 

It is okay portfolio wise because it fits in the strategy of Lupin but whatever the price they have paid is obnoxious.

Glenmark: Revenue growth in recovery mode

Glenmark Pharma’s revenue growth estimate of 18-20 per cent, with a 200-basis point margin expansion (excluding licensing income) for FY16 seems to have been received well by the Street. After opening below its Monday closing price (a reaction to disappointment over the company’s earnings), the stock gained ground on Tuesday, closing at Rs 861.

For the company, growth in revenue is expected to be driven by its US operations, likely to grow about 20 per cent. Growth of only 7.1 per cent in the US market in the March quarter, as well as one-offs and cross-currency headwinds, had led to lower than expected numbers.

Analysts at HSBC believe the FY16 estimate is realistic; they maintain a ‘buy’ rating on the stock, with a revised target price of Rs 925. Other brokerage firms such as Reliance Securities, Antique Stock Broking, IDFC Securities and Prabhudas Lilladher have higher target prices — up to Rs 1,186.

The company posted almost flat (0.63 per cent) growth in US sales, which contributed about 30 per cent to its overall sales in FY15. This was due to slower approvals for new launches, even as its existing portfolio faced more competition. With six drug approvals in the past three months and more approvals expected, growth in FY16 is expected to be higher. Recent launches will have a substantial impact only in the second quarter of FY16, says Hitesh Mahida of Antique Stock Broking. Glenmark is expected to announce launches in specialty segments, particularly dermatology, which could help further, says Mahida.

Glenmark filed 18 abbreviated new drug applications in FY15. Of the 95 product launches in the US, 70 are pending approvals (including 33 Para IV). Analysts at Reliance Securities foresee a smart recovery (26 per cent compounded annual growth over FY15-17) in the US, led by a pick-up in approvals and launches. The potential launches of dermatology product Azelaic acid (size $95 million), ortho ($450 million), cholesterol-lowering drug Welchol ($420 million) and Zetia ($1.7 billion) paint a healthy outlook in the US in the medium term, say analysts. The Company will launch Zetia and Azelaic acid on an exclusivity basis and analysts expect at least one of the two to be launched by December 2016. Besides, the company’s focus on complex injectables (six pending approvals), oral-contraceptives (13) and dermatology (eight) is a positive.

The company is growing well in Europe and Latin America (combined contribution about 24 per cent to revenue). In the March quarter, these growth figures stood at 26 per cent and 75 per cent, respectively. Rest-of-the-world sales (12-13 per cent of revenue), however, fell — 36 per cent in the March quarter and 18 per cent in FY15. Primarily, this was because Russia was hit by a weak currency and subdued business environment. Nevertheless, new products have been lined up for this market, too.

Analysts at IDFC Securities say with multiple data points expected from six ‘first in class’ clinical candidates through the next 18 months, Glenmark could generate significant licensing revenue. Successful progression of even one of these could put it in a higher growth orbit in the medium term. The company plans to utilise proceeds from the Temasek stake sale ($152 million) to reduce debt. The company’s net debt stands at $484 million.

Mahida expects further improvement on this front, with Zetia’s launch-on-exclusivity, which is expected to lead to cash flow of about $150 million.

USTR’s praise of Modi’s remarks worries pharma companies

The United States' appreciation of Prime Minister Narendra Modi's remarks on intellectual property rights (IPR) has stirred concerns among the public health groups as well as the domestic drug manufacturing industry.

While keeping India under its 'priority watch list' in the annual report on IPR laws and patent regimes of partner countries and noting that several of its policies continue to be of grave concern, the US Trade Representative (USTR) has lauded Modi's recent remarks to align India's patent laws with "international standards".

Public health groups, advocating patient rights for access to cheaper medicines, are now concerned that this should not lead to softening of India's stand by making changes in its patent law, which has been a matter of contention between the US and Indian government for its stringent provisions.

 

MSF, working with patients in several developing nations, said it is extremely concerned that any suggested modifications in India's IP laws will have an impact on availability of affordable medicines.

Another such organization, Delhi Network of Positive People, working mainly with HIV infected people around the world, has written to Modi, commerce minister Nirmala Sitharaman and health minister J P Nadda to safeguard interests of patients and not fall into the US trap to introduce IP provisions by making backdoor amendments to other laws such as the Drugs and Cosmetics Act.

The USTR report dubs China and India as sources of most of the counterfeit pharmaceuticals shipped to the US. "While it is impossible to determine an exact figure, studies have suggested that up to 20% of drugs sold in the Indian market are counterfeit and could represent a serious threat to patient health and safety," the report said.

While refraining from imposing an out-of-cycle review (OCR) of India's IPR laws, the report lauded the efforts of the National Democratic Alliance government towards "increased bilateral engagement" between both countries in matters pertaining to IPR.

The report states that the US expects India to keep the momentum going, indicating expediting the rolling out of the national IPR policy, leading to "substantial and measurable improvements" in the country's IPR and patent laws.

However, executives of domestic pharmaceutical companies, manufacturing low cost generic medicines, say India must not fall under such pressure and instead should be cautious while making promises.

"We must not make concessions in our patent law. Also, policy makers need to be more cautious while dealing with bilateral issues and making strategies," said Indian Pharmaceutical Alliance secretary general DG Shah.

In September last year, the government here had announced it would come out with an IPR policy by early this year. For this, it has set up a taskforce under the aegis of the department of industrial policy and promotion. The final draft of the policy is now pending with the ministry of commerce.

 

Source: http://timesofindia.indiatimes.com/business/india-business/USTRs-praise-of-Modis-remarks-worries-pharma-companies/articleshow/47126816.cms