Lupine Ltd’s performance during the September quarter, though one-sided at times, was in line with expectations. Revenue growth of 6% was driven by domestic markets, which grew 15.9% year-on-year (y-o-y) with a significant revenue contribution of 38%. That said, other geographies also supported revenue. Growth markets, Europe, Middle-East and Africa (EMEA), and Rest of the World (ROW) markets, posted healthy growth of 5-33% year-on-year.
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While the major US market contributed 36% of total revenue, growth here was slow and remains a weak link. That said, US sales increased 7.2% last quarter. Recall that the base business saw a significant impact of pricing pressure in previous quarters. Still, the 2% year-over-year growth in the second quarter was overwhelming. How resilient the US market’s performance is is critical to its outlook. Lupine has shortened US specialty operations to mitigate further losses. While it booked a lump sum cost of ₹326 crore in the US specialty business, said an analyst with a domestic broking, said this suggests that Lupine is focusing on cost optimization. The firm also made provisions for ₹Rs 1,879.6 crore for the class-action suit settlement of diabetes treatment drug Glumetza. Analysts said the settlement takes away a huge overhang on the stock.
However, the company also needs to resolve long-standing issues with the US drug regulator related to many of its manufacturing facilities. Generics for albuterol and Brovana, which have already been launched as inhalers, are driving sales. Nevertheless, to achieve a guided quarterly run rate of $200 million during the second half of fiscal year 2012, it is important to increase market share and move forward with more large product launches.
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