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Generics portfolio remains strong, niche pipeline swells
US branded business forms c29% of US sales with growth in recent quarters not comparable on a y-o-y basis due to a
change in accounting, inventory destocking and higher base effect in FY10. The growth in terms of prescriptions is strong
(Suprax Rx 17% y-o-y, Antara Rx growing in a declining fenofibrate market).
Generics business outlook is strong with slew of opportunities in next two years of which generic Fortamet, Glumetza,
Renagel, Fosrenol, TriCor, Cipro OS could be meaningful. Existing molecules including Lotrel have seen some price
erosion. Lupin has cumulative ANDA filings of 137 ANDAs with the FDA of which 16 are “First-to-File”, six are
exclusive and 60 are Para-IV applications. The management expects one AG entry and one FTF in this calendar year.
Lupin expects to launch 3-4 oral contraceptive products by Nov-Dec 2011. AllerNaze launch is also anticipated in this
calendar year. Long-term filings including ophthalmic products will start contributing meaningfully in the next two years.
The company plans to also enter derma and aerosols market.
India growth is strong and expected to continue at c20%. Lupin is not concentrating on acute therapies (chronic therapies
c60%). The company is planning to launch biosimilars in domestic market in near-term. Current field force is c3,500.
Ex-US/EU Lupin has interests in markets like Brazil, Turkey and Mexico. Japan has seen 12% volume growth but
competition is anticipated to increase with the number of local players entering generics.
The company expects sales growth of c18-20% for FY12. R&D to continue at 7-7.5% of total sales.
Valuation and risks
We value Lupin at INR560 based on 22x Dec-12e base earnings of INR25.5; our target multiple of 22x is a 10% premium
to the 5-year historical sector average.
Risks include: a) threats to branded business in the US (key brands like Suprax (patent expired), Antara at risk from generic
TriCor), b) delay in new product launches like AllerNaze could dent branded business if existing brand is also eroded.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Generics portfolio remains strong, niche pipeline swells
US branded business forms c29% of US sales with growth in recent quarters not comparable on a y-o-y basis due to a
change in accounting, inventory destocking and higher base effect in FY10. The growth in terms of prescriptions is strong
(Suprax Rx 17% y-o-y, Antara Rx growing in a declining fenofibrate market).
Generics business outlook is strong with slew of opportunities in next two years of which generic Fortamet, Glumetza,
Renagel, Fosrenol, TriCor, Cipro OS could be meaningful. Existing molecules including Lotrel have seen some price
erosion. Lupin has cumulative ANDA filings of 137 ANDAs with the FDA of which 16 are “First-to-File”, six are
exclusive and 60 are Para-IV applications. The management expects one AG entry and one FTF in this calendar year.
Lupin expects to launch 3-4 oral contraceptive products by Nov-Dec 2011. AllerNaze launch is also anticipated in this
calendar year. Long-term filings including ophthalmic products will start contributing meaningfully in the next two years.
The company plans to also enter derma and aerosols market.
India growth is strong and expected to continue at c20%. Lupin is not concentrating on acute therapies (chronic therapies
c60%). The company is planning to launch biosimilars in domestic market in near-term. Current field force is c3,500.
Ex-US/EU Lupin has interests in markets like Brazil, Turkey and Mexico. Japan has seen 12% volume growth but
competition is anticipated to increase with the number of local players entering generics.
The company expects sales growth of c18-20% for FY12. R&D to continue at 7-7.5% of total sales.
Valuation and risks
We value Lupin at INR560 based on 22x Dec-12e base earnings of INR25.5; our target multiple of 22x is a 10% premium
to the 5-year historical sector average.
Risks include: a) threats to branded business in the US (key brands like Suprax (patent expired), Antara at risk from generic
TriCor), b) delay in new product launches like AllerNaze could dent branded business if existing brand is also eroded.
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