Lupin May Sell 50% Of Us Joint Venture To Ally

Mova is a Puerto Rican company and the venture was seen by Lupin as a gateway to the US market. Lupin's rethink has been prompted by the fact that the venture has not performed up to expectations.

Industry sources said Lupin was negotiating with Mova to buy its share in Ceph and take over ownership of the venture's sole manufacturing unit. The unit is jointly owned by the two, with Lupin having contributed $5.1 million towards its acquisition from US drug major Ely Lilly.

Kavita Gupta, executive director, Lupin Labs declined to comment on the matter. "All our negotiations with Mova are being conducted under strict confidentiality," she said.

 

The plant's replacement cost has been estimated at $100 million. It converted bulk drugs exported from Lupin's Indian operations to formulations.

Ceph then marketed the products through its network in the US. At the time of announcing its foray into the American formulations market, the Lupin management had explained that making finished dosage forms overseas though more expensive than formulating indigenously would give its products the 'Made in USA' label which would be more acceptable to the American market.

However, two years after the venture was announced with much fanfare, Lupin is believed to have had serious doubts about the feasibility of its operations.

Ceph International manufactures and markets finished dosage forms of oral cephalosporins, a group of anti-infectives. Speed to market and price are the two crucial factors in the US market. "The venture is lagging on both counts," industry sources stated.

Lupin's future course of action if it parts ways with Mova is unclear. For the past year, Lupin Laboratories has been undergoing a revamp of sorts with the help of consultant McKinsey & Co following a lacklustre performance. Top management changes have been effected and the company's research and development programme is being given a facelift.

However, the last and possibly most significant step of the revamp, the imminent merger of Lupin Labs with sister concern Lupin Chemicals, is yet to take shape.