Street undeterred by USFDA observations on Lupin's Indore plant

Analysts keep recommendations; consensus target at Rs 1,724 a share

Last week, Lupin announced developments on two respiratory products. On Monday, it got  final approval from the U S Food and Drug Administration (FDA) to market a generic version of Allergan Inc’s Lumigan, an ophthalmic solution.

The company also disclosed that the filing for this ophthalmic product was made from the Indore facility, which was audited in January. Its Lupin Bioresearch Center (LBC) in Pune was audited in November 2014. Both audits were completed successfully, with the LBC not receiving any observations and the Indore facility receiving six Form 483s.

Street concerns led to a 2.5 per cent fall on Monday in Lupin’s stock, since similar observations have led to companies such as Ranbaxy and Wockhardt seeing import alerts from the US FDA.

  But what has calmed the Street is that after inspection by the US FDA, the Indore facility has received one Abbreviated New Drug Application approval and two site-transfer approvals. Also, Lupin’s experience in resolving issues (its another plant had come under the FDA lens some years ago) should be useful. After the FDA observations, Rahul Sharma at Karvy has upgraded his target price for the stock by 3.5 per cent to Rs 1,690 — after factoring in revenues of $8 million and $9 million for Lumigan and $10 million and $20 million for InspiraChamber for FY16 and FY17, respectively. The stock has recovered, closing 0.7 per cent up at Rs 1,660.

Sarabjit Kour Nangra at Angel Broking is more optimistic. She believes the ophthalmic product has more than $500 million annual sales in the US, with Apotex the other player, and can generate $50-80 million in sales for Lupin in FY16.

Last week, Lupin had announced two developments in the respiratory segment. One was the respiratory care device InspiraChamber Anti-Static Valved Holding Chamber in the US, under a licensing agreement with the New Jersey-based respiratory research and development company, InspiRX Inc. The second was a pact with Poland-based Celon Pharma SA to jointly develop and market a generic version of a GlaxoSmithKline brand, Advair Diskus, which has  fluticasone and salmeterol salts.   

Nangra said Lupin has been increasing investments in niche and speciality therapies such as  inhalation and complex injectables as it gears up to grow as a speciality pharmaceutical company in the US and other key markets, which should drive growth going ahead.