Lupin ex­pects US drug pric­ing pres­sure to ease

The Gulf Today - Business - - REGION -

MUM­BAI: In­dia’s sec­ond-largest drug­maker Lupin said on Wed­nes­day it ex­pected pres­sure on drug prices in the United States, which has hit its prof­its, to ease this year as larger ri­vals re­duce their ex­po­sure there.

Last week, Teva Phar­ma­ceu­ti­cal, the world’s largest generic drugs maker, said it planned to cut back some of the prod­ucts it sells in the US mar­ket.

Lupin Chief Ex­ec­u­tive Vinita Gupta said she hoped Teva’s move would cre­ate space for to ri­val In­dian drug­mak­ers like Lupin to grow.

“We do be­lieve the worst is over,” Gupta said on a post-earn­ings me­dia call on Wed­nes­day.

In­creas­ing com­pe­ti­tion and a con­sol­i­dat­ing cus­tomer base has been hurt­ing prof­its at generic drug mak­ers sup­ply­ing to the United States, the world’s largest health­care mar­ket.

As well as Teva, Swiss firm No­var­tis has also been ex­plor­ing op­tions for part of its US gener­ics busi­ness.

Those ex­its would be a “sub­stan­tial” pos­i­tive for In­dian drug­mak­ers, said Pra­ful Bohra, a phar­ma­ceu­ti­cals an­a­lyst at Reli­gare Cap­i­tal Mar­kets. But any ben­e­fit would de­pend on how much prod­uct overlap com­pa­nies like Lupin have with the mar­kets big­ger firms are ex­it­ing, he said.

“There are a lot of new en­trants com­ing in,” he said, not­ing com­pe­ti­tion was con­tin­u­ing to ramp up.

Lupin’s Gupta said that while she doesn’t ex­pect ero­sion in US generic drug prices this year to be as bad as last year, it would still be in the high sin­gle dig­its.

The com­pany re­ported a sur­prise loss of 7.84 bil­lion ru­pees ($115.57 mil­lion) for the quar­ter ended March 31, com­pared to a profit of 3.80 bil­lion ru­pees a year ear­lier.

Fif­teen an­a­lysts on average ex­pected a profit of 3.20 bil­lion ru­pees, ac­cord­ing to Thom­son Reuters data.

Re­sults were hit by a $227.2 mil­lion one-time ex­pense re­lated to im­pair­ment of some as­sets ac­quired as part of its pur­chase of Us-based Gavis Phar­ma­ceu­ti­cals. That $880 mil­lion deal struck in 2015 was aimed at re­viv­ing US growth, but price ero­sion has since taken a toll.

Lupin’s US sales slumped about 21 per cent in the quar­ter, while those in In­dia were up about 14 per cent.

The Mum­bai-based com­pany’s shares sank to a five-year low af­ter it dis­closed re­sults, clos­ing down 0.5 per cent. Lupin Lim­ited is a transna­tional phar­ma­ceu­ti­cal com­pany based in Mum­bai. It is the sev­enth-largest com­pany by mar­ket cap­i­tal­iza­tion; and the 10th-largest generic phar­ma­ceu­ti­cal com­pany by rev­enue glob­ally.

Lupin’s Q4 profit is hit by a one-time charge of $227.2 mil­lion.

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