Informist, Friday, May 20, 2022

--Lupin CFO: See tepid growth in US ops; new launches key for revival

--Facing intense competition, price erosion in US generics

--Complex drug, biosimilar launches to aid US margin growth

--Indian facilities ready to be inspected by US FDA 

--Somerset unit resolution may take time; observations repeat

By Apoorva Choubey 

MUMBAI – Lupin Ltd expects its US business to remain under pressure for the next two to three quarters because of price erosion in the core generics portfolio amid rising cost. However, the drugmaker is hoping for a revival in its US sales in subsequent quarters on the planned launch of at least two complex drugs and one biosimilar.

The growth in the US business could be tepid in 2022-23 (Apr-Mar), more or less in the same range as that seen in the last financial year, Ramesh Swaminathan, the executive director and global chief financial officer, told Informist in an interaction. For 2021-22, Lupin's North American operations witnessed sales growth of 3.7% and accounted for around 36% of total revenues. 

The business in the US is going through a tough time because the oral solid dosage market is seeing intense competition, Swaminathan said. "There is a different kind of price erosion out there," he said. 

While there is a general decline in prices across such products, the impact on individual companies has been varied because of the difference in the portfolio, he said. 

Lupin's performance in the US has been muted for almost two years now because of unexpected product recalls, inability to pass on the rise in raw material and other costs and one-off impairments.

Moreover, regulatory hurdles — with several manufacturing facilities under official action indicated status — have weighed on the pace and quality of new launches.

The company has about 110 products pending for approval with the US regulator across all its facilities, Swaminathan said. However, some of them have obviously lost their financial potency, because of which the company has not been able to grow the topline significantly in the last few years, he added. 

REVIVAL HOPES

Lupin is hoping for an improvement in US sales towards the end of the year, aided by the scale-up of its inhalation and biosimilar drugs portfolio.

It expects to launch first-to-file products such as respiratory treatment Spiriva, towards the end of this fiscal year, and improve margins in the US business. 

It is also anticipating approval for the pegfilgrastim biosimilar by the US agency any time now. "We have a market penetration strategy for pegfilgrastim, which we believe will be successful," Swaminathan said, in response to being asked about competing with players who are already selling the drug. 

Swaminathan also believes that the company's Indian facilities will come out of the official action indicated status this financial year, as remedial measures have been taken. The official action indicated classification typically implies that the US regulator will reinspect the facility and until such time, may withhold new drug approvals from the unit in question. 

For the Somerset unit, however, approval could take some time as some observations have been classified as "repeat observations" by the agency, he added.  

At 1440 IST, shares of the company traded 1% higher on the National Stock Exchange at 640.85 rupees.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Akul Nishant Akhoury

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