Lupin expects US drug pricing pressure to ease
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.