Lower tax rate boosts Lupin's Q1 net by 68%

Shares in Lupin fell as much as 6% to a one-month low of 1,598 rupees following the results, before closing down 5%

Lupin Ltd, India's third-largest drugmaker, posted a 55% rise in its first-quarter profit on Tuesday but its shares fell as some analysts noted the jump was driven in part by a lower tax rate.

Reporting under new Indian Accounting Standard rules, the company said its net profit rose to 8.82 billion rupees ($132 million) in the three months ended June 30 from 5.69 billion rupees in the same period last year.

Shares in Lupin fell as much as 6% to a one-month low of 1,598 rupees in Mumbai following the results, before closing down 5%.

An HDFC Securities analyst noted that Lupin's net profit was in line with the bank's estimate, but that margins were off 2.5%, due to higher employee costs.

Sales in North America, Lupin's largest market, surged 82.3%, helped by sales of products bought via the acquisition of Gavis in July, and higher sales of its generic version of diabetes drug Glumetza. Lupin expects Glumetza, and its generic form of another diabetes drug, Fortamet, to be "significant contributors" to sales for the year, Chief Executive Vinita Gupta told analysts on a conference call.

However, it does expect more competition for Glumetza in the coming months, after larger peer Sun Pharmaceutical Industries Ltd launched its own generic version last week, Gupta said.

Sales in Japan, where Lupin bought about 21 drugs from Shionogi last week to expand its presence there, rose 31% in the quarter.

In India Lupin's second-largest market, growth in sales was a lower than expected 5.2%, hurt largely by the government's moves to cap drug prices. But CEO Gupta said Lupin expects double-digit growth in India this year after it restructured some of the business.

"Between India and Gavis, we are hoping to launch about 25 products this year," Gupta said.