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Informist, Wednesday, Feb. 12, 2025

 

 

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--Lupin: Oct-Dec EBITDA margin was at 5-year high despite R&D investment 
--Lupin: Expect a strong close to current financial year 
--CONTEXT: Comments by Lupin management in post-earnings analyst call 
--Lupin: Have more than 20 respiratory products, 40 injectibles in pipeline 
--Lupin: Plan to file 30 ANDAs with US FDA going forward 
--Lupin: See US business growing in double digits FY25 vs high single digit 
--Lupin: EBITDA margin will be in a range of 23.0-23.5% in FY25 
--Lupin: Will see significant increase in R&D expenses in March quarter 
--Lupin: Want to build speciality as third major arm for global business 
--Lupin: Expect revenue for European market to continue at current level 
--Lupin: Complex portfolio will help secure growth over next 4-5 years 
 

 

By Aman Aryan 

 

MUMBAI – Lupin Ltd. expects to close the current financial year with strong growth in its respiratory products portfolio and continued momentum in the next financial year, the company's management said in a post-earnings analysts' call. Strong pipeline of products ranging from Tolvaptin to Glucagon, which it plans to bring into the market in 2025-26 (Apr-Mar), could aid sales growth in FY26, Chief Executive Officer Vineeta Gupta said. 

 

The company had already registered a market share gain in its respiratory portfolio during the December quarter. However, the respiratory therapy business was quite slow during the quarter despite it being the pro-respiratory season due to winter, the management said. The company expects the segment's growth to bounce back in the next two quarters.

 

The pharmaceutical company also has a strong pipeline for complex products as it plans to increase its research and development spend towards the portfolio, the management said. With this focused approach, Lupin plans to increase the share of complex products to 50% of its portfolio. Share of complex products was 35% of the overall sales during the December quarter, according to the company's investor presentation. Lupin expects the complex product portfolio to aid the sales growth for the next 4-5 years.

 

The company's spend on research and development was 7.7% of the total sales during the quarter under review compared to a 7% share in the year-ago quarter, according to the investor presentation. About two-third of this spend was directed towards complex products, the management said. The company expects to further increase its R&D investment in the March quarter, while its share of the total sales is expected to remain range-bound.

 

Lupin spent INR 4.34 billion on R&D during the December quarter, much higher than INR 3.57 billion in the year-ago quarter. However, this was 3% lower than the previous quarter. It has retained its FY25 guidance for R&D spend at around INR 18 billion, and expects this metric to be little over INR 18 billion to INR 19 billion.

 

Along with a strong pipeline of products with over 40 injectibles and 20 inhalation projects, Lupin also plans to file over 30 abbreviated new drug applications with the US Food and Drug Administration in the next two years. Complex products will have an over 50% share of the planned filings.

 

Lupin has raised its guidance for the US business and now expects it to grow in double digits in FY25 compared to its earlier estimate of a high single-digit growth. It continues to improve its profitability in the US, led by a better product mix and higher efficiencies in the base business, the company said. The region is likely to post better profitability in the next financial year on the back of tailwinds related to foreign exchange rates, input costs, and product mix, the management said.

 

Amid concerns around US tariffs, Lupin said the proposed tariffs, if implemented, could have a significant impact on the generic drugs industry as it will also increase the cost in the market, which could ultimately see some disruptions. US imports about 70% of generic drugs and 50% of such drugs come from India, the management said. 

 

Lupin plans to make its specialty business the third major arm for the global business with the US being a major focus. The company is looking to spend on products that fit its strategic aspirations and market assets. "And assets like Zopanex is a sweet spot for us," the company's officials said. "...we're also looking at late stage assets that are compelling from an investment perspective." North America accounted for 38% of Lupin's total sales during the December quarter, according to the investor presentation. For the European market, the management said revenue for the ongoing quarter is expected to be similar to the current levels. 

 

With an earnings before interest, tax, depreciation, and amortisation margin of 24.3% for the December quarter, Lupin registered its highest EBITDA margin in five years despite increased R&D spends. The company expects its FY25 EBITDA margin to be 23.0-23.5%. The company expects to see production-linked incentives for the next three years. Its other operating income for the quarter was INR 1.49 billion, up 27% on year due to higher production-linked incentives and export benefits during the quarter, the company said.

 

The company's consolidated net profit for the December quarter was INR 8.55 billion on revenue of INR 57.68 billion. On Wednesday, shares of the company closed at INR 2,025.20 on the National Stock Exchange, down 2%.  End

 

Edited by Ashish Shirke

 

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