Lupin expects muted growth in the US despite new launches

About 25 products to be launched next year will only partly compensate price erosion

Nilesh Gupta, managing director for Mumbai-based pharma major Lupin, is trying to reset investors expectation as its mojo in the US market is set to get weaker in the near term.

The company, which reported Rs 12,958 crore revenue in the nine months of the current financial year, earns about 48 per cent from the US markets.

“With one of the strongest pending pipelines in the US at its disposal, the company is well poised to address the pricing issue,” said Siddhant Khandekar, an analyst with ICICI Securities, in a recent report. “We expect US sales to grow at 18 per cent CAGR (compound annual growth rate) in FY16-19E to Rs 9,642 crore,” the report said.

Following the $880-million acquisition of Gavis in 2015, the company has stepped-up product launches and ramped-up speciality drug offering to protect its revenue from the US market.

It owns one of the strongest ANDA (abbreviated new drug application) pipeline comprising 344 filed and 137 pending approvals, including 44 FTFs (first to file). This acquisition has strengthened its position in dermatology, controlled substance products and other high-value niche generics segments, besides its maiden foray into US institutional business.

However, about 35 per cent of the US revenue for the company comes from it key anti-diabetes drugs Glumetza and Fortamet which are seeing major competition now.

“Normally, we talk about single-digit price erosion for the entire portfolio. However, when exclusive or semi-exclusive products face competition, then the erosion is greater,” says Gupta.

Last February, Lupin launched anti-diabetes drug Glumetza under 180 days’ sales exclusivity. However, the company has been able to extend it beyond the six months period as competitors Sun Pharma and Teva did not launch the product despite securing approval. Last month, Valeant launched an authorised generic version of Glumetza in the US market.

Analysts estimate that Lupin has a market share of around 75 per cent for Glumetza. Teva and Sun Pharma are expected to launch their generic versions of Glumetza in the second and third quarters, respectively.

Fortamet has also seen limited competition. This has enabled the company to hike its prices by 200 per cent in September 2015 and hold 50-60 per cent of the market share till the middle last year. However, the company has lost its share after Mylan launched a similar product.

In this backdrop, the new product pipeline has given investors high hopes as the company is ready, between Lupin India and Lupin Somerset, to launch about 25 new products in the next financial year. However, Gupta cautions, “So, I think we will probably have single digit growth in the US at the max with these products coming down.”