Despite posting losses for the second quarter of 2019-20 (Q2FY20) on account of a settlement provision on a law suit in the US and losses related to a divestment, drugmaker Lupin said its US business has been stabilising, ready to post growth in future.
Lupin's net sales for the quarter stood at Rs 4,296 crore, an increase of 10.4 per cent compared to Rs 3,890 crore in the Q2FY19. The company posted a net loss of Rs 127 crore (after exceptional items) in Q2FY20, compared to Rs 266 crore net profit during the same quarter of the previous year. It had to provide for exceptional items worth Rs 450 crore as settlement in connection with the US State of Texas in a medicare aid litigation with contractors. Accordingly, Lupin has provided for a provision of Rs 379.1 crore and net of earlier provision of Rs 70.8 crore during the quarter. The exceptional items also included loss of Rs 167.3 crore on divestment of its Japanese subsidiary Kyowa CritiCare.
Lupin's North America sales for Q2FY20 stood at Rs 1,324.4 crore, compared Rs 1,248 crore for Q2FY19. North America accounts for 31 per cent of Lupin's global sales. "The US business is stabilising and will grow as we are ramping up in-line products with Levothyroxine (a thyroid drug) launched early this year and four injectables to be launched in near future," said Vinita Gupta, CEO, Lupin. The company that launched a women's healthcare brand Solosec is also planning to launch an inhalation product and respiratory drug Fostair and a biosimilar Etanercept in the Europe this year.
The Mumbai-based company, that had been posting continuous growth for many years, suffered in the US as channel consolidation, competition and a failed large acquisition troubled the firm over the last two years.
"Our base business has stabilised and margin erosion in the US has come down to single digits. With new products that we are going to launch, our US business looks very bright in coming quarters," said Gupta. Lupin is building a portfolio of complex generic drugs and specialty products for the US market. It is the third largest generic company operating in the US in terms of prescriptions and the third largest domestic drug company in terms of revenues.
Nilesh Gupta, managing director, Lupin said that the company has launched a programme 'Quality First' to urgently resolve the manufacturing quality issues raised by the US Food and Drug Administration (FDA). The company's unit one at Mandideep in Madhya Pradesh was recently slapped with a warning letter. The warning was related to significant violations of the current good manufacturing practice (CGMP) regulations for finished pharmaceuticals and deviations from CGMP for active pharmaceutical ingredients (API). Its other facilities under the scanner include Goa, Pitambur and a facility in the US.
"Though it is challenging, but we have taken up initiatives to bring at least two of these facilities ready within the next two quarters for the US FDA re-inspection. The efforts encompass entire manufacturing and related processes such as Standard Operating Procedures (SoPs) and cleaning," said Nilesh Gupta, managing director, Lupin.