Drug maker Lupin has given the highest ‘Total Shareholder Return (TSR)’ in the past three years, according to a recent study of the major global generic drug manufacturers by The Boston Consulting Group (BCG).
The BCG analysis shows Lupin gave an annualised average TSR of 29.9 per cent, ahead of the 18.4 per cent of Israel-based Teva Pharmaceutical, the world’s largest generics maker. Teva is next on the list.
Of the nine generic companies that gave good benefits to their shareholders, seven are Indian companies, said the study.
Total Shareholder Returns (TSR) of generic companies for three years
|Source: BCG global generics report|
Sun Pharmaceutical, which is India’s largest drug company in terms of market capitalisation, occupies the fifth position, with a TSR of 13.7 per cent. Dr Reddy’s Laboratories and Cipla, two of the largest domestic drug companies, follow Sun Pharma with 6.2 per cent TSR each.
Sources said BCG’s latest annual study on TSR was based on a unique benchmark, using four main parameters — change in share prices, profit growth, investor expectations and cash flow yield. This was done for the period from August 2006 to July 2009. The study is based on data from Standard and Poor’s Global Vantage and the BCG Value Science Centre, they said.
Apart from Teva, the US-based Watson Pharma is the only overseas generic company that gave good returns, of 15.8 per cent annually, said the study released in September.
“We consume close to 70 per cent of our active pharmaceutical ingredients (API) to create formulations. This backward integration model has not only given us cost leadership, but unbeatable margins and the highest per product revenues, and a distinct well-defined profitability than others globally,” explained Nilesh Gupta, group president and executive director, Lupin.
Lupin also has the distinction of being among the fastest growing top 10 generic makers in two of the largest markets of the world, the US and Japan. Over the past five years, the company has recorded a compounded annual growth rate (CAGR) of 31 per cent in terms of sales and 53 per cent in net profits, respectively. It’s also the fastest growing among the top five Indian drug companies, said company sources.