 "Lupin Pharma")
Pharma major Lupin is likely to demerge its active pharmaceutical ingredients (API) business as part of an internal restructuring exercise, media reports said on Tuesday.
API is the bulk drug or ingredient that goes into making drug formulation.
According to media reports, the pharma major is considering demerging its API business in order to unlock value.
After a demerger, there could be a potential listing or stake sale in the API business.
A Lupin spokesperson told Business Standard: “At Lupin, we continuously evaluate strategic options to create value for our stakeholders. We remain committed to our strategy of focusing on our core business areas while exploring opportunities for growth and expansion.”
Vinita Gupta, chief executive officer (CEO), Lupin, said in the company’s fourth quarter earnings call that the API business is recovering.
“Apart from India getting to double-digit growth and US business improvement, our API business recovered in the quarter with demand growth in our core products,” she said.
Ramesh Swaminathan, executive director (ED) and Global chief financial officer (CFO), Lupin,
said that in the fourth quarter, the API business has grown by 46.4 per cent year-on-year (YoY). It was on higher sales of Cefaclor and 7-ACCA.
The API business contributes around 7 per cent to Lupin’s overall turnover.
Lupin’s managing director (MD) Nilesh Gupta said that there has been a successive build over the quarters in the API business during 2022-23.
“We don’t expect this growth to continue, but we would expect it to kind of continue more or less at this kind of level,” he had said.
Analysts feel that uptick in the API business is coming from an overall revival in the industry.
“The uptick is because the API industry is witnessing demand comeback,” said Axis Securities in a June report.
There was some inventory normalisation and de-stocking immediately after the pandemic, which is now normalising.
Analysts expect a 13 per cent compound annual growth rate (CAGR) in Lupin’s overall revenues from FY23-FY25.
Lupin’s peer Glenmark, too, had demerged its API business a few years back. It spun off its API business into a separate entity Glenmark Lifesciences in 2019. It was eventually listed in 2021.
