Lupin's new M&A deals to strike at Indian rival Sun's perch in Japan

Lupin Managing Director Nilesh Gupta

Indian specialty and generics drugmaker, Mumbai-based Lupin Pharmaceuticals, is seeking out new acquisitions in Japan as it looks to beat back competition from its Mumbai rival Sun Pharmaceutical Industries as both companies continue to deal with the sales fallout from their struggles in the U.S.

The Japanese drug market is a major deal for pharma and is currently the second largest healthcare market in the world, estimated at $73 billion--more than 7% of the total $1 trillion global pharma market.

Last week, Mumbai-based Sun announced a major deal with Swiss drugmaker Novartis ($NVS) to buy 14 of its prescription brands for $293 million to sell into Japan and thus widening its footprint in the lucrative market.

Sun is hoping to capitalize on a series of Novartis fumbles in the country as in 2014, Novartis' Japanese affiliate was indicted along with a former employee for allegedly manipulating data in clinical trials for a blockbuster heart drug.

Then in February 2015, the government suspended Novartis operations for 15 days as punishment for failing to properly report drug side effects--all of which has seriously damaged its brand in the country.

The Sun-Novartis deal has irked Lupin, which is now looking to consolidate its position in the country in the wake of the tie-up. The head of Lupin's Asia-Pacific business Fabrice Ergos told the India Infoline financial news portal: "In Japan, we would like to double our base. We cannot grow organically, so my goal is to double the base of Japan in sales.

"We cannot expect growth from our own portfolio, you know it is crude, plus to grow ourselves 10% to 12%, but we have to make a bold movement."

Lupin already has operations in Japan as well--in 2011 Lupin, bought Tokyo-based I'rom Pharmaceutical and in 2007 it bought Kyowa Pharmaceutical Industry.

Both Sun and Lupin have witnessed struggles in their U.S. businesses due to regulatory issues, with Sun Pharma hit particularly hard as it deals with U.S. FDA concerns at some of its manufacturing plants.

Meanwhile Lupin just last month was hauled up by the U.S. FDA on a manufacturing operation at its Goa plant for failure to meet 9 areas of operating standards.

But the Japanese market grew by 9% in the latest quarter; it's looking like a far more attractive market for both companies seeking growth outside the U.S.

- see the story from India Infoline