We hope to introduce around 50 new products in the Indian market in the next three years
Earlier this year, Lupin Chemicals and Lupin Laboratories had merged to form Lupin Ltd. Lupin, the leader in anti-tuberculosis drugs, now has plans to emerge as a global generics player. The company is currently developing a basket of cephalosporin products for the international markets.
The company plans to make substantial investments in filing abbreviated new drug applications (ANDAs). It has also set up a research and development centre in Pune to pursue research in patentable form through New Drug Delivery Systems (NDDS) and New Chemical Entities (NCE).
For the domestic market, the company is planning to launch a slew of new products to maintain its growth momentum. D B Gupta, Chairman and Managing Director, spoke to Indira Vergis and Kripa Mahalingam about the company's future plans.
You have selected cephalosporins as a thrust area for your foray into the generics markets. What is the rationale behind this decision?
Yes, our thrust in the generics markets is cephalosporins. We have developed expertise in cephalosporins, a segment that has very little competition. Lupin has the only plant in Asia approved by the US Food and Drugs Authority (FDA) for its sterile cephalosporins facility. Cephalosporins are a big market globally, estimated to be worth around $10 bln.
While we supply cephalosporins in finished dosage form to Europe, we supply bulk actives to the US markets. We are planning to file five more ANDAs -- all of them in cephalosporins -- this year. We also have enough products(cephalosporins) in our pipeline.
We have already started marketing one of our cephalosporins in the US and we expect it to generate a sales of around $ 14 million in the first year. Currently all our generics to the US are sold through marketing associates.
The cardio-vascular segment is also another thrust area where we plan to launch a range of products. We are awaiting Food and Drugs Authority(FDA) approval for our manufacturing facility for cardiovascular drugs at Mandideep.
Are you looking at more tie-ups in the US?
Yes, in future, we will be looking at more of these tie-ups. But we are working on a range of products for which we plan to go ahead on our own. These will be speciality products. We are developing plans for that, but it will happen only gradually.
How open are you to the idea of contract manufacturing/research for global companies?
We are open to the idea of contract manufacturing given India's low cost advantage. But as far contract research goes, we would like to first establish our research skills. So at this point, we are not looking at contract research. We are also open to the idea of co-marketing.
Anti-tuberculosis drugs account for a major chunk of revenues. But with the market recording declining growth rates, how do you plan to hold on to revenues and profits?
It's true that the anti-tuberculosis drugs market has been declining. But Lupin has still managed to grow. We must also remember that TB has been making a comeback in many countries because of AIDS. That's why I believe the anti-tuberculosis market will continue to be important to us both domestically and at a global level.
The Indian market for anti-tuberculosis drugs is, admittedly, small - around Rs 300 to 350 crore. We have a market share of 41 per cent here. And while there may not be much growth in the Indian market, we have still managed to grow around 10 per cent. The global market for anti-tuberculosis drugs is around $ 550 million.
The buyers at this level are usually institutions like the World Health Organisation and United Nations. We are setting up a dedicated facility for the manufacture of anti-tuberculosis drugs in Aurangabad.
It will be operational by March next year. Once that happens, we hope to become more aggressive in the global market. To start with, we will be targetting global aid agencies.
International agencies always demand higher quality drugs and we hope to provide that with our integrated plant. Once we start supplying to the global market, we hope to add substantially to business volumes. We are aiming to capture a five per cent share of the global market in the first year.
Are there any plans to shift focus onto any new segments?
Earlier, Lupin labs was perceived as anti-tuberculosis drugs company but now we are being recognised more for our capabilities in cephalosporins.
However, now we are also looking at other therapeutic segments like gastroenterology, diabetes, asthma and pediatrics. But our gameplan here is not to just come up with a product or two, but an entire range of products and keep pumping the segments with more products. We hope to introduce a dozen products in the current year and introduce around 50 new products in the Indian market in the next three years.
Exports has increasingly become more important as they offer better growth potential as compared to the domestic markets. Other than the US and Europe, are there any other market you plan to focus on?
Our biggest export markets are the US and Europe. Obviously, they are the markets that offer the best prices. Other areas that we will be focusing on are the CIS countries and Venezuela. For the CIS, we are developing country-specific products while we have an entire range of products for the Venezuelan markets.
Isn't the CIS a risky bet? After all, in the past , companies have known to faced problems in collecting payments from the region.
Yes, it is a known fact that there have been payment problems in the past with the CIS. That's why we are planning to take adequate precautions to safeguard out interests.
The main problem there is that often funds get blocked at the distributor's end. To overcome that, we plan to set up our own marketing team out there and supply goods only against letters of credit.
What are your plans for reducing your rather high debt burden?
Our debt restructuring is two-fold . Now that we have invested sufficiently in capital expenditure, we hope to reduce debt partly by internal accruals and more efficient working capital management.
We have restructured a portion of our debt to reduce the average cost of borrowing. Currently, our average cost of debt has come down to 12 per cent and we hope to reduce it to 11 per cent by the end of this year.
How has the merger of Lupin Laboratories and Lupin Chemicals helped?
The merger has given us quite a few benefits. For one, many of our common expenses on marketing and other administrative expenditure will be trimmed.
For another, Lupin Chemicals was strong in fermentation, process capabilities, while we were stronger in synthesis. The coming together of both allows for better technology development and integration of operations.
