Investment Ideas - Lupin Pharmaceuticals Inc

Company profile
Lupin Chemicals Ltd came into being in 1983. In the year 2001, Lupin Laboratories Ltd was amalgamated with the company and the name was changed to Lupin Ltd.
In the year 1987, the company’s  Cephalexin Plant at Mandideep and 7 ADCA plant at Ankleshwar were started. In 2006, the company started commercial production at Jammu. They also operate a dosage production facility at Indore. Lupin has established itself into a leading manufacturer of cephalosporin API’s and in the cardiovascular segment.

Acquisitions
The Company’s acquisition list is quite large.

In the year 2003, Lupin Pharmaceuticals Inc. was formed in USA, to expand the companies  marketing  activities in the US. In the year 2007, the company acquired Rubamin Laboratories Ltd   a Vadodara based company. In Japan Kyowa Pharmaceutical Industry Company Limited, a leading Generic Company was acquired. In the year 1989, the company formed joint venture in Thailand, known by the name Lupin Chemicals (Thailand) Ltd.

During the course of 2008-09, the company concentrated in the Japanese market and received approval from Ministry of Health & Labour Welfare for ten products. Hormosan Pharma GmbH, a generic company in Germany was acquired in this period. The Company holds 36.65% stake in Generic Health Pty Ltd., in Australia, 60% stake in Pharma Dynamics in South Africa and 51% stake in Multicare Pharmaceuticals Philippines Inc in Philippines.
During the year 2009-10, Lupin (Europe) Ltd, UK and Lupin Pharma Canada Ltd, Canada were incorporated. Lupin Holding B V, the Netherlands came under Lupin through Max Pharma Pty Ltd, Australia, which is a wholly owned subsidiary. In January 2010,  Novodigm Ltd, Lupin Pharmacare Ltd and Lupin Herbal Ltd, were amalgamated with the company. In August 23, 2010, the company incorporated Lupin Mexico SA de CV, Mexico as a subsidiary company. This year also saw the increase in stake in Generic Health Pty Ltd., (Generic), Australia, from 49.91% to 76.65% Due to this raise of stake three other companies, Bellwether Pharma Pty Ltd., Australia, Generic Health Inc., U.S.A. and Max Pharma Pty Ltd., Australia, became subsidiaries of Lupin.

Another two companies incorporated were Lupin Philippines, Inc., Philippines and Lupin Healthcare Ltd., India, as subsidiaries in 2011. This year also saw the acquisition of I’rom Pharmaceuticals. In June 2011, Lupin got worldwide rights for the Goanna Brand and the complete range of premium therapeutic oils, rubs and ointments. 

Product range

The company has lined up an impressive range of products, both generic and branded formulations. The company also deals with  Active Pharmaceutical Ingredients (APIs).
The company's product range begins from Cephalosporins, CVS, CNS, Anti-Asthma, Anti-TB, Diabetology, Dermatology, GI, and other therapy segments. Their APIs products include antibiotics, Antibiotics, ANTI-TB, Cardiovasculars, Central Nervous System, Analegesics and ANTI-GOUT, Injectable cephalosporin

Financials

According to openly available data net sales of the company have increased from 5315.89 of last year to 7010.49 cr. This is an increase of 1694.60 Cr. Other operating income has risen to 112.02 which is also higher than last year’s 68.94 Cr.  This makes the total income of the company 7122.51 an increase of 1737.68 Cr. from last year’s figure of 5384.83 Cr. Cost of Employees has increased by 131.86 Cr. totaling 713.08 Cr. Other expenses totals 2004.71 Cr. Net profit stands at 1260.43 Cr.( after tax). The company’s reserves stand at 4757.20 as against 3645.08 last year. The Basic EPS stands at 28.9 against 18.02 last year. The diluted EPS is 28.07 as against 17.94 last year.

At the time of writing this note, in a latest news Lupin Ltd has informed BSE that its Board of Directors of the Company, has recommended dividend @ 200% i.e. Rs. 4/- per share of the face value of Rs. 2/- each for the year ended March 31.The Company's shares were trading at Rs.751.25.

Shares of the Pharma sector are always considered as a safe investment for various reasons. Putting together all available data collected we can be assured that this company has a good potential to do well in times to come. This company’s shares could be bought on dips for short term and long term investments.

Disclaimer: I do not hold any shares or any other interest in this company

Investment Ideas - Cipla

 
Cipla was founded by Dr. K. A. Hamied in the year in 1935. Over a long period of 78 years since 1935, Cipla has grown to become one of the largest pharmaceutical names, not only in India but also worldwide. Cipla has a strong presence in over 170 countries Today’s Cipla has 34 manufacturing facilities and 2000 products, and employing 20000 personnel catering to a wide spectrum of diseases. The company’s Research and Development (R&D) Centre has spearheaded and delivered many new products. The company claims to be one of the world’s largest generic pharmaceutical products manufacturers.



The 78 year journey of Cipla has seen many unique milestones. The Company has a rare distinction of a visit by Mahatma Gandhi in 1939.

During the During World War II the company has helped India by manufacturing life saving drug formulations. In the 1960s, ventured into bulk drug manufacturing in the industry in India.

In 1970, Ciplas’ efforts in getting the New Patent Law in force paved the way for Indian pharmaceutical companies manufacture a patented product.

In 1978, Cipla introduced Metered-Dose Inhaler (MDI). Today, Cipla is world’s largest supplier of inhaled medication and devices.

The most notable effort was in 2001, when Cipla made HIV treatment drug Antiretrovirals (ARVs). This drug brought down the cost of treatment for HIV infected patients dramatically, making HIV treatment affordable to millions of patients. Similarly in 2012, the prices of cancer drugs, also got reduced due to the company’s efforts.In 2005 the company produced an anti-flu drug helping the Government combat the Bird Flu epidemic. This was done within a short period of 3 months.

Recently the company has started concentrating on profitability. This could be seen in the moves by Cipla in the USA where it has started filing applications with the US Food and Drugs Administration (USFDA). In the USA it is seeking approval for its generic products. It is also on verge of building its own sales team. Cipla’s initiative in the lucrative US market is likely to increase the profit targets. When we look at the background of the company’ extensive range of products and well established  research and Development, it very likely to reap rich benefits in the US markets. 

Not only the US market, joint ventures and even acquisitions are being planned in Turkey, Morocco, Brazil and Nigeria. This does not mean that the domestic market is downplayed. The company has plans to increase its market share in the Indian market.

Cipla has made substantial investments in the manufacture of Biosimilars and Active Pharmaceutical Ingredients (APIs). These investments are likely to bring in more profits to the company. Cipla has built up a reputation as a low cost drug maker. Looking at the company’s activity in the past confirms this statement. The company is, like many other Pharmaceutical companies vulnerable to tough market competition. The profits margins of Cipla can go lower. This does not pose a major problem to the company, because of the extensively large range of products and market share. There are positive news too. For example the share of Europe and Australasia has grown from 26 per cent in FY 2010-11 to 30 per cent in 2011-12. The sales were also growing at 32 per cent and 18 per cent, respectively.

Considering the market leadership of the company in the key areas like respiratory care, Anti-Viral and Urology, this company becomes an attractive one from an investor’s angle. At the time writing this notes the company’s share were trading at Rs. 397. Investors with a longer time frame  in mind can consider this stocks for their portfolio.

Disclaimer: I do not hold any shares or vested interest in this company.