Lupin denies it plans to sell Indian pharmaceutical unit

Lupin Ltd, the world's largest maker of drugs to fight tuberculosis, is considering selling its unit that markets drugs in India, said two people with knowledge of the matter. Lupin, however, said it has no plans to sell its domestic operations.

Founding shareholders who own a combined 47% of the Mumbai-based company have started the process of finding a buyer for the operations, said the people, who declined to be identified because the discussions are private. The Indian business may be worth at least $1 billion (`4,460 crore), one person said.

Selling the Indian medicines unit, which accounted for 32% of Lupin's `5,710 crore of revenue in the year ended 31 March, may help finance in- vestments in more profitable markets overseas. Lupin is the fifth largest supplier of generic drugs in the US based on prescriptions and US sales rose 27% to `2,050 crore last year.

Lupin said it has no plans to sell its domestic operations. “This is baseless and there is no such activity going on”, the company said in an emailed response to questions from Bloomberg on Friday.

The company's shares fell 0.85% to `479.40 in Mumbai.

Sales at Lupin's domestic formulations unit increased 17% to `1,550 crore in the year ended 31 March. The business has focused more on treatments for chronic diseases over the past five years and less on acute conditions, Monica Joshi, a healthcare analyst with Avendus Securities Pte, wrote in a 1 July report.

If the sale does take place, the company should get at least eight-nine times the sales of its Indian unit, Hemant Bakhru, an analyst at CLSA Asia-Pacific Markets, said in an interview on Monday. “Lupin has a fairly strong domestic business, so I don't see any reason why they should sell at a lower price’.

Piramal Healthcare Ltd sold its branded generic drug unit in India to Abbott Laboratories for $3.72 billion last year. That acquisition valued the unit at nine times the annual sales, Chairman Ajay Piramal had said in May 2010. International pharmaceutical companies have made $11.8 billion of acquisitions in the last five years, according to Bloomberg data.

Lupin was founded in 1968 by Chairman Desh Bandhu Gupta, a billionaire with a mas ter's degree in chemistry. Lupin had about 4,000 medical sales representatives in the domestic market, according to its 2011 annual report. Gupta and his family control 46.96% of the company.

(Source-: mintlive)