How Lupin engineered its road to record profits

On the evening of February 8, at least 800 people assembled in Mumbai for the launch of Made in India, a biography of Desh Bandhu Gupta (DBG), a chemistry professor who started Lupin Laboratories in 1968 with a Rs 5,000 loan from his wife and built it into one of India’s most formidable pharmaceutical companies.

In the audience sat Managing Director Nilesh Gupta, 52, and his sister and Chief Executive Officer Vinita Gupta, 58, with their mother, Manju Gupta, and their siblings, listening to tributes to their father, who passed away in June 2017 at the age of 79.

For them, the evening was as much about the road ahead as the one already travelled. In FY25, Lupin reported gross sales of Rs 22,192 crore and a profit after tax of Rs 3,306 crore, its balance sheet net cash positive, revenues up about 50% and profits up nearly 170% over five years. After a period in which the company faced pressure, it is back at the table, and the siblings who run it are thinking about what comes next.

“It was not just about that evening,” Nilesh tells Business Today afterwards. “It was also about the pharmaceutical journey and the journey going forward.” Every business model, he says, has a time limit. Lupin has lived through exactly that realisation, how it responded forms the core of the story.

In 2015-16, the Indian generics industry was riding a wave. The US market, which absorbed large volumes of affordable generic medicines, was growing rapidly, margins were healthy and Indian drugmakers were expanding aggressively. Lupin, at its peak, was the second-largest pharmaceutical company in India by market value.

What followed was industry-wide tumult that left nobody entirely unscathed. Sustained pricing erosion in the US generics market compressed margins across the board. Regulatory scrutiny of Indian drug manufacturing plants intensified. For companies that had built their business models around volume-driven US generics, the adjustment was an ordeal. At Lupin, the pressure was compounded by specific challenges in key manufacturing facilities that required focused remediation and capability upgrades.

Addressing those regulatory issues has been a gradual process. Several facilities have since been remediated and cleared, although the company continues to work through regulatory observations of practices followed at certain plants. Profit fell from Rs 2,556 crore in FY17 to a mere Rs 255 crore in FY18. While the company was profitable in FY20, it reported a loss in FY21 and FY22, when it was as much as Rs 1,510 crore in the red. Revenue stayed largely flat for several years, reflecting the difficulty of expanding the top line while profitability was under pressure.

“When you go through these challenges, you realise that you cannot operate with an outdated business model,” Nilesh says. “You have to refresh your business model and bring in new capabilities to deliver on that model.”

Vinita Gupta distils the lesson. “One of the biggest challenges is adapting to change. No business model can remain forever. Adapting to market dynamics and identifying where the biggest opportunities lie becomes a very strong part of strategy,” she says.

The Calls That Mattered

What distinguishes Lupin’s response to that pressure is the way it reassessed its portfolio and made choices that were difficult in the short term but necessary for the long term. The company exited Japan, a market it had entered with significant ambition. In 2007, the company acquired Kyowa Pharmaceutical for around $230 million. Japan was ageing, demand for generics was rising. But the market proved harder to crack than anticipated. Regulatory complexity, pricing reforms that compressed generic margins, and the management bandwidth required to run a Japanese operation from India made the bet increasingly difficult to justify. Exiting freed up both capital and leadership attention for markets where Lupin’s competitive position was stronger.

“Those decisions are difficult because sometimes you have attached your name to those businesses for a long time,” Nilesh says. “There are emotions involved and people involved. But continuing with something as a side activity is not right. If you want to do something, it has to be front and centre.”

By 2015, Lupin had grown into one of India’s largest pharmaceutical companies by global sales and established a significant presence in the US generics market with revenues crossing $2 billion. In 2016, looking to consolidate its position, Lupin acquired Gavis Pharmaceuticals, a New Jersey-based niche generics firm with a pipeline targeting a multi-billion dollar US market and 62 drug filings pending with the FDA. The deal gave Lupin its first US manufacturing footprint. But a reulatory crackdown on opioids in the US stalled the Gavis pipeline, and by 2018, Lupin had taken an impairment charge of Rs 1,464 crore on the acquisition. The company then refocused on inhalation products, high-value generics and cost discipline, which set the stage for the recovery that came next.

The approach was consistent with the founding philosophy of making clear choices and going all in. Tuberculosis, India’s biggest infectious killer, stood out starkly as a national priority. DBG made a counterintuitive decision to manufacture TB drugs end-to-end, starting with ethambutol. The decision paid off and Lupin went on to become the world’s largest anti-TB drug manufacturer.

“One of the biggest early learnings was how a strong position was built in TB, an area that had tremendous unmet need,” Vinita says. Lupin was among the first to invest in manufacturing active pharmaceutical ingredients (API) for TB drugs such as rifampicin, which involves complex fermentation science. “TB remains an important part of our institutional and India businesses,” she says.

Weight of legacy

The approach was consistent with the founding philosophy of making clear choices and going all in. “If you are going to be in TB, you go all in on (treatment). You do not do it on the side while doing 10 other things,” Nilesh says.

In the US, the focus moved from commoditised generics towards complex products where barriers to entry are higher, competition is more limited and pricing is more durable. “Generics have evolved into complex generics. Now it will be complex generics and biosimilars. That is where we will continue to play,” Nilesh says after a pause.

Ramesh Swaminathan, Executive Director and Global CFO, puts it in product terms. “Our respiratory portfolio Albuterol, Spiriva, and Xopenex provides sustainable moats because of their complex drug-device combinations,” he says.

In India, the company focused on chronic therapies, respiratory, cardiovascular and diabetes segments, where Lupin had built strong physician relationships and brand equity over the years. “The story is about reach, access, doctor relationships, patient equity, patient centricity, and innovation as well,” Nilesh says.

The numbers echo this rebalancing. A decade ago, the US accounted for roughly 40% of Lupin’s revenues, with India contributing around 25-30%. Today, India’s share has risen to around 35-40%, while the US continues to be the company’s strongest growth driver at about 40%.

One structural advantage Lupin carries into this next leg is its position in the two largest pharmaceutical markets in the world, with Nilesh leading India and Vinita leading the US. “We are fortunate to have two home markets as a company,” Nilesh says. “The US is the largest pharmaceutical market in the world and also the largest generics market. It is a market you have to be in, whether from a generics perspective or from an innovation perspective.”

Running a company your father built carries a weight that balance sheets do not capture. Nilesh and Vinita have divided the responsibility along geographic lines, a structure that plays to both their strengths and reflects the company’s two-market focus. Both grew up watching DBG build Lupin from a single-product company into a global generics player, and both carry that into every strategic decision.

Vinita says DBG’s dream was to take Lupin to the US, and this was inculcated in her at a very early age, when she started taking trips with her father whenever he went abroad. These learnings have stood with her over time. “I have learnt this business from my father,” Vinita had once explained. “Talking to him at the dining table since I was young. He has taken me to many business meetings across Europe since I was fourteen.”

Vinita describes the portfolio evolution as a decade-long capability building exercise that is now beginning to show commercial results. “Over the last decade we have built capabilities in complex areas such as respiratory, biologics, and complex injectables,” she says. “We are also making moves in innovation, including through our ophthalmology acquisition in Europe, which gives us a starting point to build further in that therapy area.”

That acquisition was VISUfarma, a pan-European specialty eye care company with a portfolio of branded products covering conditions ranging from dry eye and glaucoma to retinal disease, which Lupin acquired in September 2025 for €190 million. The investment in capability building shows up in the R&D numbers too. In FY25, Lupin spent Rs 1,767 crore on R&D, roughly 8% of sales, up from Rs 1,527 crore the previous year.

Respiratory has emerged as the most visible proof of this strategy. Lupin now has multiple products approved and launched in the US, Europe and Canada, making it the company’s largest therapy area. Building a respiratory business requires deep investment in device engineering, inhalation science and regulatory expertise, precisely the kind of capability that creates durable competitive advantage rather than temporary margin.

On biologics, the progress has been gradual but is now reaching a commercial phase. “On the biologics front we have approvals in Europe and Japan, and we recently received our first US FDA approval,” Vinita says. “We have a strong pipeline and expect to launch several products over the next five years across key global markets.”

Complex injectables are emerging as a third pillar alongside respiratory and biologics. “We have made significant progress in complex injectables. Over the last year, we have validated several platforms through regulatory approvals and product launches,” Vinita says. Quality and compliance, Vinita adds, are foundational. “We regularly review learnings from regulatory inspections and strengthen our systems accordingly.”

Back in the Numbers game

In FY25, Lupin reported its highest profit after tax in several years, with gross sales and margins both up from the lows of FY22. “We have been steadily improving our performance over the last several quarters,” says Swaminathan. “This is on the back of several new product launches in the US and other geographies.”

Gross sales reached Rs 22,192 crore in FY25, the balance sheet moved to a net cash position, and profitability has been sustained across consecutive quarters. In FY25, Lupin was the sixth largest pharmaceutical company in India by total income. By market share, it ranks eighth, according to data from IQVIA.

The stock has moved in line with the improved results. From around Rs 850 in 2017, Lupin’s share price climbed above Rs 2,100 apiece by early 2026, hitting a peak near Rs 2,400 in 2025 before settling near Rs 2,200, delivering a cumulative return of roughly 150% for long-term investors. Its market capitalisation stood at Rs 1.6 lakh crore as on April 20.

The margin recovery has not gone unnoticed. Motilal Oswal analyst Tushar Manudhane says Lupin delivered “its highest-ever quarterly Ebitda margin in the past 10 years,” though he cautions that “competition in certain products and some gestation period for commercialisation of complex product pipeline in inhalation, injectables and biosimilar space could limit earnings growth over FY26-28.”

“What gives us confidence today is that we have seen this story before,” Nilesh says. “When you go back to the early stories of Lupin, there were many times when the question was whether the company would even exist or not. We do not have that anymore. We have a certain level of business that is robust and growing. Now the question is how we can grow faster.”

The Rivals Who Got There First

Lupin’s performance over the past two years is best seen in comparison with how its peers navigated the same cycle.

Sun Pharma, the leader, moved early into specialty and US branded generics, reducing its reliance on commodity pricing. Dr Reddy’s focused on complex chemistry and biosimilars, Cipla on chronic therapies and selective complex launches, while Zydus strengthened its domestic branded portfolio alongside a novel pipeline.

“While pricing erosion in the US generics market has weighed on margins across the sector, the companies that have performed better are those that moved earlier towards higher-value products,” Vinita says.

Lupin’s strategy aligns with that approach, with the focus now on execution pace and translating its innovation push into scale. The valuation gap tells its own story. Lupin’s market capitalisation of compares with Sun Pharma’s approximately Rs 4 lakh crore. It also trails Dr Reddy’s and Cipla on market value. Despite the improvement in operating metrics, investors have yet to close the gap, a signal that the market is waiting for the innovation ambition to show up in sustained earnings.

A significant part of Lupin’s recent US performance stems from exclusivity on three products: Tolvaptan, a drug for kidney disease; Mirabegron, used to treat bladder conditions; and Spiriva, a lung therapy. These first-to-file exclusivities delivered higher margins during their protected windows. More recently, Lupin received US FDA approval in September 2025 for Lenalidomide, a generic version of Bristol Myers Squibb’s blockbuster cancer drug Revlimid, used to treat multiple myeloma, a blood cancer that affects plasma cells in the bone marrow. The branded version had estimated annual US sales of $7.5 billion, making it one of the most significant generic approvals in Lupin’s history. As exclusivity windows close and new ones open, sustaining US revenues will depend on whether the complex generics and biosimilar pipeline can keep filling the gap.

Analysts note that sustaining the momentum will require careful execution. ICICI Securities analyst Abdulkader Puranwala says, “Dependency on US exclusivity is rising,” and that the injectable and biosimilar pipeline “may cumulatively not suffice to fill in the gap of revenue and earnings of these exclusive products.” He adds that “management believes that its US sales will likely sustain at $1 billion after loss of exclusivities in the three products.”  

The Innovation Ambition

The road ahead for Lupin is the most ambitious and the least certain. Both Nilesh and Vinita are clear that the company’s long-term goal is to move beyond generics, even complex ones, towards proprietary medicines, branded products and genuine innovation.

“How do you create those capabilities? Those are the kinds of questions that help you take the story forward, not just to be another success story, but to make a real difference,” Nilesh says.

He is under no illusion about what the transition demands. “Each of the evolutions we have gone through, from being an Indian company to a global generics company, from a global generics company to a complex generics company, and now towards becoming an innovation company, each of them had its trials and tribulations.”

It is a candid acknowledgement of how hard the transition is. Indian pharma has been attempting to move from generics to innovation for two decades, and the results across the sector have been mixed. Building the clinical trial capability, the regulatory infrastructure and the commercial model to launch proprietary drugs in regulated markets is a different order of challenge from manufacturing generics efficiently.

But Lupin is approaching it as a long-term investment rather than a leap. The biosimilar pipeline, which requires clinical trial expertise and regulatory sophistication, is pushing the company towards practices closer to innovation. The VISUfarma acquisition gives it a branded foothold in the European eye care segment, where pricing is durable. The respiratory franchise, built over a decade, demonstrates that Lupin can compete in segments that demand more than manufacturing efficiency.

Not everyone is cautious. Axis Securities analyst Aman Goyal says Lupin is “building a durable growth engine,” pointing to “22 sole first-to-file exclusivities” and a biosimilars road map that “provides sustained pipeline visibility and margin-accretive growth.”

The biosimilar road map is the most concrete expression of that ambition. Lupin is targeting the launch of Ranibizumab, an eye drug used to treat a form of age-related vision loss where abnormal blood vessels leak fluid into the back of the eye causing sight to deteriorate, in the US by FY27. Aflibercept, which treats similar eye conditions and is also used for diabetic patients where high blood sugar damages blood vessels in the retina, and Etanercept, a drug for rheumatoid arthritis and other conditions where the immune system mistakenly attacks the body’s own joints and tissues, are expected to follow by FY29-30.

Each of these is a high-value, technically demanding product in markets where biosimilar competition is still limited. If it executes on schedule, it would represent a meaningful commercial step beyond the generics model.

The broader context for Indian pharma is shifting. Anti-obesity medicines (GLP-1), a class of drugs originally developed for diabetes that have shown dramatic results in weight loss and are now the most talked-about drug category in the world, have created one of the largest new treatment categories in decades. Lupin has moved beyond evaluation. In December 2025, it signed an exclusive licensing agreement with Gan & Lee Pharmaceuticals for a novel GLP-1 receptor agonist as patent expirations on branded drugs begin to open the market to generics and biosimilars.

On mergers and acquisitions, the firm has indicated that it is open to bolt-on deals that accelerate capability building in priority areas, rather than large transformative buys. The ophthalmology deal in Europe is the most recent example of that approach, targeted, capability-focused, and designed to give Lupin a platform to build from rather than a finished business to run. “Pharmaceuticals will remain our core,” Swaminathan says. “We are open to acquisitions in India and specialty buys in Europe and the US, but only if valuations are compelling.”

In India, the opportunity is broader than defending existing positions. The Indian business has been growing consistently faster than the overall market, with about two-thirds of revenue coming from chronic therapies. Lupin is now building positions in newer segments, oncology, women’s health and gastroenterology, as it looks to deepen its domestic footprint.

Whether Lupin can close the valuation gap with its larger peers will depend on the biosimilar and innovation pipeline delivering on schedule. Lupin’s targets are clear. Much will depend on execution.

Target progression

Nilesh points to a progression of targets as a reference for the ambition ahead. He says, when Lupin was at Rs 100 crore, the target was Rs 1,000 crore. When it reached Rs 1,000 crore, the target was $1 billion. When $1 billion was achieved, the vision extended to $3 billion.

“He always had a number in mind for where he wanted Lupin to go,” Nilesh says. “A pharmaceutical company is known for its brands. Therefore, that proprietary piece will be extremely important for us.”

Vinita frames the destination in terms of what the company will stand for. “Our aspiration is that innovation becomes a significant part of Lupin’s business. At the same time we remain committed to affordable medicines through generics.”

Whether Lupin can close the valuation gap with larger peers will depend on whether the biosimilar and innovation pipeline delivers on schedule. Both Nilesh and Vinita have laid out targets. Much will depend on execution. 

 

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