Lupin's Indian drugs business may be on the block. Sources tell Bloomberg the company's founding shareholders, who together own 47% of the India-based company, are shopping the domestic drug operations, which could be worth more than $1 billion. The local unit accounted for almost a third of Lupin's $1.3 billion in sales during its most recent fiscal year.
The company says it has no plans to sell the domestic business. "This is baseless," Lupin told Bloomberg. But the sources said selling off the Indian unit could help the company invest in other parts of the business, including exports to the U.S. and other, more profitable foreign markets. The company already is the fifth-largest generics supplier in U.S., where sales grew by 27% last year to about $460 million.
If bidders do emerge for the unit, they could well include a Big Pharma firm aiming to expand further in a fast-growing emerging market. As Bloomberg notes, the company has a 3% share of the Indian drug business, which doesn't sound like a lot, but the market is fragmented; Cipla, which boasts the largest domestic market share of any one company, has 5%, Nomura Securities figures.
The potential sale comes as local officials and domestic companies worry about the growing influence of multinational pharma companies. Abbott Laboratories bought Piramal Healthcare's branded generics business last year for $3.72 billion, instantly becoming the country's biggest drugmaker. Overall, foreign pharma companies have spent $11.9 billion on deals in India over the past 5 years, Bloomberg says.
Indian leaders are well aware of this fact, and some officials are proposing a cap on foreign investment in the drug business, with deals above a certain ownership threshold requiring government approval.