Lupin divests its Japanese injectables business to Abu Dhabi company

Company is looking at enhancing efficiencies in Japanese market which is facing pricing pressure

Mumbai-headquartered Lupin on Thursday announced an agreement to sell its Japanese injectables business to neo ALA Co. Ltd, a wholly owned subsidiary of Abu Dhabi-based Neopharma group. The company said that the move will help to streamline its Japanese operations and enhance focus on branded generics business in Japan. 

The deal value was not disclosed. 

Japan contributes 14 per cent of Lupin's revenues and it ranks number five in that market. 

The company said that it has entered into a definitive agreement through its Japanese subsidiary Kyowa (Kyowa Pharmaceutical Industry Co., Ltd.) for the sale of its Japanese Injectables business and related assets in Japan to neo ALA Co. Ltd, a wholly owned subsidiary of Neopharma group, the UAE's largest pharmaceutical manufacturer headquartered in Abu Dhabi. 

The plant and associated facilities are based out of Atsugi, Japan and has been engaged in sales and contract manufacturing of injectable products. 

“The divestiture of our Injectables business in Japan is a step towards streamlining our Japan operations and bringing sharper focus on building a hybrid (Brand/ generics) pharma model in Japan. We believe that Neopharma group is the right partner for Kyowa Criticare as they appreciate the strategic importance of this business unit and would be able to deliver value to business partners and customers, leveraging Kyowa Criticare's people who are critical assets,” said Fabrice Egros, President Lupin APAC and Representative Director – Kyowa.

In a recent interaction with Business Standard, Lupin managing director Nilesh Gupta had said that Lupin's focus in Japan would be on efficiencies. It manufactures a lot of products for Japan in its Goa plant and it aims to be more vertically integrated. "From a volume perspective, the market keeps growing at 10 per cent. From a value perspective, its a single digit growth at best. The main reason is the price cuts - from once in two years now its down to every year. There is a lot of pain in that market. Our goal is to accelerate vertical integration for our products where we dont do the active pharmaceutical ingredient," Gupta had said. 

He had also added that Lupin is not bullish on the market which it feels would grow at a rate lower than the company's overall growth rate. "The profitability is bit lower than the average profitability of the company. But its a solid market to bank on. Its a sizeable business that we will be able to grow." 

This transaction does not involve or affect the other operations of Kyowa, namely research, manufacturing, marketing and distribution of oral solids and other dosage forms in Japan.

Lupin shares closed at Rs 732.9 on the BSE, down 0.3 per cent.