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The company being acquired is a leading ophthalmic player and a trusted brand in Mexico, which recorded revenues of approximately $28 Million (around Rs 174 crore) in calendar year, 2013.
Lupin's revenues from the rest of the world markets stood at Rs 517 crore in Fy13 growing at 43 per cent. Thus the acquisition not only will aid the growth of Lupin's revenues from Latam but with Lupin having presence in US and other countries as well as having its own ophthalmic range will help Grin grow better too.
Lupin is developing a strong pipeline of Opthalmic products for US too and launched eye drops of antibacterial gatifloxacin with six months exclusivity a few months back.
Sarabjit kour Nangra at Angel broking feels that the acquisition will provide a lot of synergies to the company and add to its ophthalmic pipeline. Vinita Gupta, Chief Executive Officer, Lupin Limited said, "We are very pleased with our entry into the Mexican market through Laboratorios Grin.
This acquisition is a reflection of Lupin's commitment to expand into the Latin American market and build its global specialty business. We see a lot of synergies in this acquisition and plan to bring our ophthalmic pipeline to build the Grin business as well as leverage their commercial presence to enter other promising therapy segments."
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The acquisition gives Lupin an entry into the Mexican Pharma market and a select other LaTAM markets. Mexico is one of the fastest growing pharmaceutical markets in the world valued at over $13.5billion and growing at 9-10 per cent annually.
Management has not disclosed the transaction details, however Hitesh Mahida at KR Chowksey shares and securities says that as per Lupin's acquisition history transaction could be at1xsales resulting in an outgo of$25-30 million.
Mahida believe that this acquisition should not put any strain on the balance sheet since the company will be debt free in FY14. Management indicated that Grin's acquisition will be earnings accretive right from the beginning and plans growing it to $100 million (almost four folds) in 5-6 years.
With the news Lupin after touched intradays highs of Rs 946.05 (Wednesday close Rs 936.60) closed a Rs 935.85 on Thursday.
The stock has retracted from 52 week high of Rs 1,003 on 3rd March'14 and offers a good opportunity for investors to enter the stock. While this acquisition and USFDA approval for launch of generics of Niaspan (cholesterol lowering drug) received on 21st March bode well and will drive FY14 Revenues and profitability, its March'14 quarter performance is likely to be driven by growth in the US sales and profitability driven by a strong pipeline of niche products.
The generic launches of Trizivir (HIV treatment drug), Triplix (cholesterol lowering), Cymbalta (anti-depressant drug) and Zymaxid (Antibacterial eye drops) will drive the growth. While the first three were launched in end of December' 13 quarter, the eyedrops were launched in the start of the quarter).
Zymaxid and Triplix generics have been launches on exclusivity and even after the 180 day exclusivity ends the products are likely to see limited competition.
The other products as Cymbalta lunched in the multi player market has seen its market share increase by 30 bps to 11.5 percent as per IMS data a few days back.
