This Rakesh Jhunjhunwala-owned pharma stock hits over 4-year high

Lupin rose 4 per cent to Rs 1,258.70 on the BSE in intra-day trade on Wednesday, a level that was last seen in May 2017

Shares of Lupin hit an over four-year high of Rs 1,258.70, up 4 per cent on the BSE in intra-day trade on Wednesday on the back of heavy volumes in an otherwise weak market on expectations of healthy growth in the near term. The stock of the pharmaceutical company was trading at its highest level since May 2017.

Till 11:14 am, trading volumes on the counter nearly doubled with a combined 3.54 million shares having changed hands on the NSE and BSE so far. In comparison, the S&P BSE Sensex was down 0.56 per cent at 51,641 points.

Ace investor Rakesh Jhunjhunwala held 7.25 million shares or 1.6 per cent stake in Lupin at the end of the March 2021 quarter, the shareholding pattern shows.

The stock has outperformed the market in the past six months by a wide margin. In the last one month, it has rallied 17 per cent as compared to a 6 per cent rise in the S&P BSE Sensex.

Lupin today announced that the United States Food and Drug Administration (USFDA) have accepted the Biologics License Application (BLA) for its proposed biosimilar to Neulasta (pegfilgrastim) through a filing using the 351(k) pathway. Pegfilgrastim has estimated annual sales of $3.66 billion in the US, as per IQVIA MAT December 2020.

Nilesh Gupta, Managing Director, Lupin said, “The pegfilgrastim filing is our first biosimilar filing in the US and is a milestone in our research and innovation journey as we continue to focus on delivering unique and affordable solutions to alleviate disease burden. Biosimilars is a key part of our growth strategy and we are proud of the world-class achievements of our group.’’

The BLA submission is supported by similarity data from analytical, pharmacokinetic, pharmacodynamic and immunogenicity studies.

Lupin is a multi-national pharmaceutical company, that specialises in branded and generic formulations, API’s (active pharmaceutical ingredient) and advanced drug delivery systems in the area of biotechnology. The company has 15 manufacturing sites and 7 R&D sites across the globe.

On May 27, Lupin announced the achievement of key milestones for Lupin’s MEK inhibitor compound (LNP3794) that is planned for development by Boehringer Ingelheim in combination as potential targeted therapy for patients with difficult-to-treat cancers. As part of the agreement, Lupin has received payment of $50 million from Boehringer Ingelheim.

Lupin and Boehringer Ingelheim inked a licensing, development and commercialisation agreement in 2019 for Lupin’s novel oncology compound to treat KRAS-driven cancers. Lupin’s MEK inhibitor developed as part of its oncology pipeline had previously shown pre-clinical activity as a single agent as well as in combination, the company had said in a press release.

“On the back of strong ramp-up of inline products and meaningful new product/niche launches, Lupin is confident to achieve a solid growth trajectory with continued margin expansion and market share gains across products. Moreover, better growth in domestic formulation, operating leverage and cost rationalisation should aid performance in the near-term,” analysts at Geojit Financial Services said in a Q4FY21 result update.

“Lupin has taken several steps to improve overall EBITDA (earnings before interest, taxes, depreciation, and amortization) margins. Launch of value-added products including biosimilars could improve gross margins, alternate vendor strategies can bring down the overall procurement and manpower costs that can rationalise expenses for launch of new products, rationalization of R&D costs to have more focus on complex products (8 per cent R&D costs over the long term), lower cost in Solosec promotions could improve EBITDA margins by 590 basis points over the period FY20-FY23E,” Axis Securities said in a stock update.