Healing Lupin

Market changes and increased regulatory oversight in the US have hurt Lupin, but India’s third-biggest drugmaker is making efforts to come back.

- P.B. Jayakumar

IT HAS BEEN A SUBDUED golden jubilee for Lupin Ltd, and not only because founder Deshbandhu Gupta did not live to see it, having passed away last year, but also because the company stumbled in 2017/18, posting a net loss of 774 crore in the last quarter. Over a dramatic 12 years starting 2005, it had raced ahead of peers to become India’s second-largest in pharma (after Sun Pharmaceuticals) in 2016/17, and the eighth biggest generic drug maker in the world. But in 2017/18, all its key financial indices took a hit – net sales, which had risen 24.4 per cent in 2016/17 over the previous year to reach 17,119 crore, fell to 15,559 crore, while net profit, which had risen 13 per cent to touch 2,557 crore in 2016/17 was down to just 251 crore.

Sales in North America, the US in particular, contribute heavily to Lupin’s revenue (as they do for all leading Indian pharma companies). In 2017/18, North American sales dropped 28.7 per cent to 5,893.9 crore against 8,262.7 crore the previous year, while the US’s contribution to overall sales declined to 38 per cent from 45 per cent three years ago. It has since dropped further to 31 per cent.

In the first half of this financial year, Lupin’s total revenues were 7,807 crore, just 0.2 per cent higher than the same period last year. But the reported net profit was only 468.7 crore, 42.4 per cent down from 813.1 crore for the corresponding period last year. The lower figures have taken their toll on Lupin’s market cap, which dropped to 38,629 crore (as of November 11) from 79,600 core in end 2015. What went wrong?

THE RISE