Lupin may spin off R&D arm as separate entity

Lupin may spin off its R&D arm into a separate entity, in line with its research-based peers that include Dr Reddy's Laboratories and Sun Pharmaceutical, which have already floated separate firms to look after R&D.

Pharma companies normally separate R&D activities into concentrate on basic research as another main area of business as well as to de-risk the same from the parent company.

Lupin chairman D B Gupta said there was no immediate plan for de-risking the R&D spend.

"But, in future, when the research activity of the company reaches a self sustaining level, we can't rule out the possibility of a dedicated corporate approach in this area of business," he said.

Gupta added that the R&D expenditure of Lupin was all set to increase substantially in the coming years. Currently, the company spends about eight to ten per cent of its turnover on R&D annually.

During the fourth quarter last year, the R&D expenditure of Lupin had grown by almost double to Rs 27.5 crore compared with the corresponding period previous year.

The company's dedicated R&D facility in Pune was set up in 2001. Lupin had spent about Rs 100 crore to set up the Pune Research Park and had shifted all its research activities and teams from other locations to this facility.

Lupin's facility with a laboratory space of about 1,50,000 sq ft spread over 19 acres in Pune houses about 200 scientists.

Analysts say that the R&D facility of Lupin should be run as a competitive profit centre driven by the objective to create intellectual property for licensing and marketing.

To give fillip to new chemical entities research, Lupin had also established collaborations with institutions such as IICT, NCL, and IISc Bangalore and a few academic institutes overseas.

The company had recognised that the growth in topline and bottomline would come from intelligent and successful research only, they added.

The R&D efforts of the company are now reflected in the filing of abbreiviated new drug applications (ANDAs) in the regulated markets. Three ANDAs have been approved during the fourth quarter of last financial year.

The company filed five ANDAs, three drug master files (DMFs) and two dossiers in the developed markets during the same quarter.