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Lupin (LPC) has acquired Irom Pharmaceutical (IP), a mid‐size injectibles
unit in Japan, for an undisclosed consideration. The acquired business has
total sales of USD70mn. We believe this acquisition would strengthen
LPC’s franchise in Japan. Pending clarity on acquisition value and
consolidation time lines, we maintain our earnings estimate for FY12‐13E.
Reiterate ‘BUY’.
Lupin acquires injectibles business in Japan
Lupin (LPC) has announced acquisition of Irom Pharmaceutical (IP), Irom Holdings’ (IH)
generic specialty injectibles unit, for an undisclosed consideration. Also, Kyowa (Lupin’s
Japanese arm) has entered into a strategic alliance with Irom Holdings to provide
operational support to the former by conducting clinical trials for the Japanese market.
Irom Holdings is an integrated player with core business of contract manufacturing and
research, wherein generics injectibles is non‐core.
Irom to enhance Lupin’s franchise in Japan
IP acquisition will augment LPC’s franchise in Japan and complement its current
portfolio, which is largely into oral generics. The acquired injectibles portfolio addresses
CVS, GI, anti‐infective, oncology and nutrition therapies which could be strong growth
driver in long term. Japan could be the next largest regulated markets for generics at a
time when generic opportunities recede in US and EU beyond CY13. We believe Lupin,
with an established track record of integrating and turning around businesses, has the
potential to strengthen the IP franchise. Moreover, the latter provides Lupin access to
front‐end distribution in the large hospital segment (DPC segment accounts for 35% of
total beds in Japan healthcare).
Outlook and Valuations: Strategic acquisition; Reiterate ‘BUY’
LPC’s current sales from Japan account for 11% of total business, which are expected to
surge to 15%. Irom has indicated, in its press release, operating margin of 3‐4% for the
injectibles unit. However, Lupin expects margins to be healthy and in‐line with it
current business (Kyowa has 15‐16% EBITDA margins in FY11). Further, there is no debt
liability acquired from Irom. We reiterate ‘BUY’ recommendation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Lupin (LPC) has acquired Irom Pharmaceutical (IP), a mid‐size injectibles
unit in Japan, for an undisclosed consideration. The acquired business has
total sales of USD70mn. We believe this acquisition would strengthen
LPC’s franchise in Japan. Pending clarity on acquisition value and
consolidation time lines, we maintain our earnings estimate for FY12‐13E.
Reiterate ‘BUY’.
Lupin acquires injectibles business in Japan
Lupin (LPC) has announced acquisition of Irom Pharmaceutical (IP), Irom Holdings’ (IH)
generic specialty injectibles unit, for an undisclosed consideration. Also, Kyowa (Lupin’s
Japanese arm) has entered into a strategic alliance with Irom Holdings to provide
operational support to the former by conducting clinical trials for the Japanese market.
Irom Holdings is an integrated player with core business of contract manufacturing and
research, wherein generics injectibles is non‐core.
Irom to enhance Lupin’s franchise in Japan
IP acquisition will augment LPC’s franchise in Japan and complement its current
portfolio, which is largely into oral generics. The acquired injectibles portfolio addresses
CVS, GI, anti‐infective, oncology and nutrition therapies which could be strong growth
driver in long term. Japan could be the next largest regulated markets for generics at a
time when generic opportunities recede in US and EU beyond CY13. We believe Lupin,
with an established track record of integrating and turning around businesses, has the
potential to strengthen the IP franchise. Moreover, the latter provides Lupin access to
front‐end distribution in the large hospital segment (DPC segment accounts for 35% of
total beds in Japan healthcare).
Outlook and Valuations: Strategic acquisition; Reiterate ‘BUY’
LPC’s current sales from Japan account for 11% of total business, which are expected to
surge to 15%. Irom has indicated, in its press release, operating margin of 3‐4% for the
injectibles unit. However, Lupin expects margins to be healthy and in‐line with it
current business (Kyowa has 15‐16% EBITDA margins in FY11). Further, there is no debt
liability acquired from Irom. We reiterate ‘BUY’ recommendation.
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