India's Lupin shops for U.S. brands to bolster margins

Lupin is joining the list of genericsmakers looking toward branded drugs for growth. The Indian company is scouting for U.S. brands to buy, President Nilesh Gupta tells Bloomberg, particularly in the dermatology field.

Why would a generics specialist like Lupin want to get into the branded drugs business? In a word, margins. As Bloomberg points out, the company's branded drugs deliver more than five times the bottom-line boost as generics do. So, buying in brands is "the No. 1 priority" for Lupin, Gupta told the news service.

The ambition isn't singular in generics these days. The industry is seeing lots of growth thanks to blockbusters falling off the patent cliff, but that bolus of new products will pass, leaving copycat drugmakers to look for other sources of growth. Teva Pharmaceutical Industries ($TEVA) was so intent upon building up its branded business that it spent $6.8 billion to buy Cephalon, the U.S.-based maker of such successful brands as Provigil and Nuvigil.

Still, moving outside the generics framework isn't without its risks. As SMC Global analyst Souvik Chatterjee told Bloomberg, Lupin's branded ambitions "would entail a lot of clinical testing and marketing. Whether they are equipped to do all this is a worrying factor."

- read the Bloomberg piece