LupinDrug maker scouting for Indian companies specializing in therapy segments such as nephrology and urology

LupinIndia’s fifth largest drug maker by revenue, Lupin Ltd, is scouting for acquisitions in India in specific therapeutic areas to gain market share and penetration.

The Mumbai firm is working with its merchant banker Morgan Stanley to identify companies that would strategically fit in with its profile.

“Even though we haven’t directly spoken to any company, we have seen some companies, but those haven’t fit in with our plans,” said Shakti Chakraborty, group president, India region formulations, Lupin. “However, we will not stop looking at options. If a company is of value for us, we’ll go for it.”

Another executive, who didn’t want to be named, said Morgan Stanley had suggested Orchid Chemicals and Pharmaceuticals Ltd, but it didn’t suit Lupin. US-based Hospira Inc. eventually bought Orchid’s generic injectable business earlier this month for $400 million (Rs1,850 crore).

“Lupin’s strategy is not unique. Everyone is open to acquisitions, but the minute MNCs (multinational companies) step into the game, the deal prices soar and then it becomes too expensive for an Indian company to acquire an Indian company,” said Chirag Dagli, pharma analyst, Pinc Research Ltd. “For instance, an Indian company would not have paid the price that Hospira paid for Orchid.”

Chakraborty said Lupin is looking for firms specializing in therapy segments such as central nervous system (CNS), nephrology and urology. An acquisition, he said, would help Lupin reach markets it doesn’t have a strong presence in.

A Mumbai-based analyst, who also requested anonymity, said a presence in the CNS segment would give Lupin a huge boost as only a few companies are in that space now. “Lupin is one of the fastest growing Indian companies with a growth rate of over 20%,” the analyst added.

Growth through acquisitions of companies and key brands are outlined in Lupin’s 2013 plan, which the firm intends to finalize within a month.

Lupin, which had a revenue of Rs1, 141.2 crore in fiscal 2009, is aiming for sales of about $650 million (Rs3, 042 crore) by 2013. “We will get there through the organic and inorganic growth route and in-licensing products, especially patented products that have no presence in India,” said Chakraborty.

“Most Indian companies would be looking for acquisitions in India because it’s not an easy market to raise market share organically,” said another Mumbai-based analyst with a foreign brokerage.

“It’s a very fragmented market and theoretically is a good market for consolidation to happen. It’s a high growth and high cash-generating market,” this analyst said, speaking on condition of anonymity. “So, when there is a strategic fit with a company or even a particular brand, it would be worth acquiring.”