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.