Lupin Ltd, the Mumbai-based pharmaceutical player, is planning to "significantly" increase its presence in the developed and developing markets through organic growth and acquisitions in 2009 despite grim predictions by industry analysts for generic medicines.
S Ramesh, president, finance and planning, Lupin, said the company will see 30% year-on-year growth during the year in both developed and developing markets.
"We will increase penetration in developed markets and grow considerably in the developing markets," Ramesh said.
However, according to recent estimates by consulting and analytics firm IMS, the US market for generic medicines will grow by a meager 1-2% in 2009, against the 14-15% growth in the developing world.
Currently, more than 60% of Lupin's turnover of Rs 2,773 crore comes from its international business.
Of this, about 13-14% comes from Japan, while over 30% is from the US and the European Union.
Among the developing markets, Lupin has a presence in countries including Saudi Arabia, Oman, Brazil, Columbia, Chile and Argentina, as well as those in Africa, and the Commonwealth of Independent States (CIS) countries such as Russia, Ukraine, Uzbekistan and Kazakhstan.
"In the next two to three years, sizeable revenues will come from the CIS market," Ramesh said.
He said that business in the US would see an average of over 40% annual growth in the future.
But is it reasonable for companies to bet heavily on developed markets considering the slowdown and the slow growth?
"Yes," said industry watcher Sanjay Singh, associate director, corporate finance, at professional services firm KPMG.
Singh said that the overall US market for pharmaceuticals is worth $300 billion — which is half the global market — while Japan, on the other hand, is worth $60 billion.
"The size of markets like US, Japan is much higher than that of the developing world.
The US market may be growing slowly, but if Indian companies were to succeed with even one or two products, they can earn revenues multiple times higher than those from developing countries," Singh said.
According to Ranjit Kapadia, head, private client group, at broking firm Prabhudas Lilladher, it is better to expand in developing countries in the time of slowdown.
"But the risks associated with receivables are higher in developing countries, vis-a-vis developed countries."
Apart from organic growth, Ramesh said, Lupin would also consider making buys when-ever the need arises.
"We continue to evaluate good candidates for acquisitions, specifically in geographies like Middle East, Latin America or Central East Europe. We look for companies with strong product pipelines and technology expertise."
In 2008, Lupin made a spate of acquisitions like Pharma Dynamics (South Africa), Hormosan Pharma (Germany) and Generic Health (Australia).