Lupin aims for Japan top five, converting generics and offering Indian firms a way in
This article was originally published in Scrip
India's Lupin expects to be among the top five to six generic companies in Japan by 2015, backed by a multi-faceted strategy that will include product introductions, shifting production to India to improve profitability, and an interest in brand buys, among others. Currently Lupin's Japanese subsidiary, Kyowa Pharmaceutical Industry Co, is the ninth largest generic pharmaceutical firm in Japan.
Along the way, Lupin is also open to exploring any possibility of forming alliances with Indian peers that may want to launch into Japan in view of the head-start it has had there, Vinod Dhawan, Lupin's president – Asia Pacific, Middle East, Africa and Latin America, told Scrip in an interview.
Lupin recently acquired the Toyko-based specialty injectables firm, I'rom Pharmaceutical Co (scripintelligence.com 17 November 2011), its second acquisition in Japan, after it acquired Kyowa in 2007. Mr Dhawan said that Lupin is interested in in-licensing products/brand buys to augment the firm's portfolio in Japan. "We are continuously evaluating various opportunities such as difficult-to-develop generic products, injectables and patches from European, Japanese and Indian companies," he said.
While Lupin declined to provide any guidance on its Japanese operations, Mr Dhawan said that given the "new arithmetic at play" and the firm's "aggressive" business plans there, the company was looking at revenues of $275-300 million by the end of 2012-13 from Japan.
Mr Dhawan also expects the integration of the newly acquired I'rom business to happen "much faster" than what it would have taken in the past given Lupin's "learnings" from the Kyowa deal. "The biggest learning from [the] Kyowa buy has been the understanding of the Japanese market operations. Based on our experience with Kyowa, Lupin is well equipped to better leverage local sensitivities to operate a successful profitable pharma business," he added.
I'rom is a profit-making company and has had "promising" first half results. Mr Dhawan said that the firm's growth momentum going forward will be fuelled by "additional synergy benefits" flowing from Kyowa/Lupin in the form of better market reach and better cost of goods sold (COGS) for key products, among others. I'rom currently manufactures and markets about 100 products and reported revenues of ¥5,361 million ($69.6 million) for the fiscal ended March 2011.
I'rom has a presence in the diagnosis procedure combination (DPC) hospitals segment within Japan, where injectable products enjoy a significant usage. Currently there are more than 1,400 DPC hospitals in Japan that cover more than 35% of beds there and I'rom's products reach about 75-80 % DPC hospitals.
Significantly, Kyowa too has seen improved performance parameters since it moved into Lupin's fold. Mr Dhawan said that Kyowa, which was in "break-even position" at the time of the acquisition, is today "one the higher PBT-earning companies" in the Japanese generic space. "Also we have been in a position to grow revenues by about 60% in Yen terms," he added. Kyowa reported sales of ¥11.6 billion for the fiscal ended March 2011, accounting for 11% of Lupin's revenues.
Initiatives to further improve operations in Japan are also ongoing. Lupin had earlier identified active pharmaceutical ingredients (APIs) as a core area for synergy, wherein the Indian firm would develop and file APIs needed by Kyowa, facilitating savings and improved margins. Mr Dhawan said that Lupin had filed four drug master files this year, of which one had been approved while the rest were expected to get approval by the first half of 2012. "We have created a pipeline of an additional 10-12 APIs, which will be filed in the due course of time," he added.
Lupin has also been keen to back-end some part of Kyowa's production to its Indian sites, making filings from India for Japan. Mr Dhawan said that working was underway on 15-20 projects and two of these had already been filed. "Those products are expected to be launched sometime in the first half of FY2012-13," he said. Kyowa currently markets more than 125 molecules and more than 400 stock keeping units in Japan and has one of the largest CNS product portfolios on the Japanese generic market.