Stable price situation (low single digit price erosion) in US currently
EBITDA margins (excluding forex exchanges) improved to 20.6% and operating EBITDA improved to 18.6% due to improved business mix and cost optimization. Forex loss was ~26 cr. for this quarter. Targeting EBITDA margins of 20-22%
Flu product demand was very low due to the weakest flu season in a decade leading to low growth in US
API has done poorly because demand for antibiotics product has been very low globally
Effective tax rate have improved to 15.9% as most of subsidiaries have done well. For the whole year, it will be in mid-30s. For next year, it will be sub-30s
Solosec: Most of the benefit due to rationalization of sales force have been recorded
Albuterol: Ramp up has gone well with monthly market share of 9%+ of the generic market. Hope to get to 20%+ market share in the next couple of quarters. Market is 70mn units and Lupin is targeting 14-15mn units (is capable of higher numbers). Is manufactured at Pithampur Unit III
gSpiriva: Litigation is on-going and FDA filing is on-going, queries from FDA is normal IRs. Expect to launch in mid CY 2022
Fostair: Branded product; Expect FDA approval in the next couple of months. Have been inspected for this in the past; Expect district court decision within a year. Is manufactured at Pithampur Unit III and Coral Spring facility
Levothyroxine: Currently at 17% generic market share and 14% of overall market; Want to go up to 20% market share of the generic market (i.e. 300 bps more)
Complex injectables: Depo products out of Netherlands ready to go into clinic (first product will go into clinic this quarter; next one will follow soon). Fordoz liposomal: expect at least 1 filing in the next fiscal year; Peptides: Will file one of the products in the next couple of months
Ranibizumab: Will go into Phase III this year
Etanercept: Ramp up has been slow with launch in 3 EU markets so far because it’s kind of a branded product; Expect product to be rolled out in all key markets in 12-24 months
Goa, Pithampur and Tarapur: Ready for inspection; Expect FDA visits to only happen in H2CY22
Somerset observations: Unhappy with 13 observations, was a tough and very long inspection, wouldn’t generalize with other facilities. Deeper transformation program initiated. Still work to be done on the compliance front
Mandideep, Pithampur: Have a very deep transformation program
R&D will remain at 9% for FY22
Company is now qualifying US sites for government products
Expect 6+ injectable filings each year; 3-4 inhalation products; total 30-35 ANDA filings to US each year
Branded US sales was $2mn this quarter (40 people sales force)
Brazil operations is now profitable
Nebule product are outsourced (contract manufactured)
Disclosure: Invested and position size same as before
Under the license agreement, the two companies will take on the development and commercialization of ciraparantag in Europe, Australia and New Zealand. The drug candidate is targeted for the reversal of the anticoagulant effect of direct oral anticoagulants and low molecular weight heparin in patients who use these products and need emergency surgery or are experiencing life-threatening uncontrolled bleeding. Ciraparamtag restores the body’s ability to form blood clots.
The presentation made by vinita in jp morgan healthcare conference is available on lupin -investor -presentation section and on youtube.
Has some broad colour on companies focus areas, plans, audit etc.
Worth al ook. Not pasting the link here as not sure on copyrights.
Products on shelf: Reduced from 174 to 168. Portfolio rationalization is behind now, price erosion is much more controlled (at single digits) and hope that it persists
Very poor flu season in US impacted revenue (~$36mn). Despite that, Q4 US sales came at $195mn (compared to $212mn in Q4FY20 and $188mn in Q3FY21). Sequential uptick was due to albuterol and levothyroxine ramp up.
EBITDA margins have improved sequentially to 18.8% sales vs 18.6% in FY21Q3. Expect margins of 19-20% in FY22 and base margins should be 20-22% by FY23. Margins will spike up to 26-27% when a complex product is launched and then come back to base levels of 20-22%
Gross margins came at 65.1% (driven by albuterol) and higher write-offs due to weak flu season
For FY22, inhalation portfolio will kick in (brovana, perforomist). Experiencing additional challenge for famotidine.
Guidance: Expect 10% US sales growth in FY22. Goal is to get to $1bn+ US sales by FY23. India should grow in double digits
Extremely committed for the business and not willing to sell out
India: Acute product sales have grown this quarter. Growth was at 5.9% vs 8.5 IPM for Q4FY21 (IQVIA). For FY21, Lupin grew at 3.9% vs IPM of 4.3% (IQVIA).In chronic, Lupin grew at 10.2% vs 8.4% IPM growth. Now, 65% of sales are chronic in nature. Field force stands at 7700. Should see double digit growth in FY22.
In chronic therapy, focus is on diabetes, cardiovascular, and respiratory. Diabetes is growing the fastest among chronic therapies (20%+). Highly under indexed in women’s health, vitamins and supplements, dermatology and will launch products in these categories
Albuterol: Has ramped up further and made the supplies, IQVIA reported market share at only 8% levels as IQVIA numbers are lagging supplies. Haven’t seen shift to Sandoz. Pricing has been stable thus far. Hope to build-up market share to 20% levels (by end of FY22)
gSpiriva: In process of responding to FDA, have got priority review, expect approval and launch in FY23. Litigation should be settled in FY22, expect court proceedings to pick up pace in September 2021
gFostair: Made significant progress with UK agency and expect approval soon (to be launched in the next couple of months)
gBrovana: Material product for FY22
Levothyroxine: Currently at 18.7% of generic market share. Started FY21 at 15% of generic market share
Metformin: At 50%+ share in glumetza (with reduced pricing to gain back market share). Yet to launch fortamet
Biosimilars: Filed 1st product (pegfilgrastim) in USA but the facility has not been inspected. Should be launched in 15-18 month timeframe.
Etanercept: Launched in Germany + Austria + eastern Europe. Seen revenue growth QoQ. France is yet to happen.
Revlimid: Looking to launch in 2022
Specialty portfolio: Major product will be trick for women health division (H2FY22)
API: Lower sales due to lower antibiotic sales and a weak flu season. API generate lower gross margins but have similar to the corporate level EBITDA margin
Employee expenses: Came lower also due to a one-off, in which they had provided for higher expense for sales incentives which didn’t come through and thus Lupin wrote back that amount. Expect to be <18% of sales going forward
Effective tax rate came down in FY22 with Brazil and USA entities returning to profitability. Expect it to remain at 27-28% in FY22
Inspections: FDA has come up with remote inspection guidelines, hope to get remote inspection soon. Pithampur Unit II required a deeper fix which was done. Tarapur and Goa sites did not require deeper fix.
R&D: At 9% level in FY21 and this will decline going forward. Complex generics (inhalation + injectable) + biosimilars expenses were front-ended. Inhalation portfolio is paying off. Injectable portfolio (with iron + peptide + liposomal + depot) will start contributing in the next 2-3 years (from FY23). Biosimilars will start contributing in the next couple of years. 5-years ahead: complex generics will be the biggest revenue and margin drivers
Debt: Repaid Gavis loans
CAPEX: Will be ~1000 cr. in FY21
FY21 working capital was ~145 days. Want to bring it down to 100-120 days
The query on promoter seriousness was a shocker/ dampener. There is no smoke without a fire.
found the promoters slightly shaky vis-a- vis the gung ho agressive attitude in previous calls. Most of the timelines of launches were extended over previous estimates.
trying to make some sense out of the pipeline indicated till now, inhalation looks with limited competition to play out in 1-2 yr, while biosimilar looks crowded and fda approvals are at least 2-3 yr off in most cases, very low visibility on injectables as it is little far out as well.
enbrel mkt size is only for eu.
s no
drug name
type
likely launch by lupin
mkt size
competition including innovator
remarks ( target mkt)
1
albuterol
inhalation
launched
400
perrigo
gsk, teva , 3 authorised generics in albuterol
2
fostair
inhalation
2-3 months
uk mkt
3
spiriva
inhaler
FY23
3000
boehringer,
patent expiry fy 20
4
brovana
inhaler
FY 22
500
sunovion
patent expiry fy 20
5
dulera
inhaler
Fy 22
400
merck
patent expiry fy 20
6
etanercept (enbrel)
biosimilar
launched
1500
pfizer/amgen,sandoz, samsung wyeth, in india-- cipla, intas
approved in eu and launched in few eu markets and japan
7
filgrastim ( neupogen)
biosimilar
785
hexal, pfizer,apotex, several others
launched in india,
8
pegfilgrastim
biosimilar
filed in US launch by FY 23
950
coherus, mylan, biocon, novartis, pfizer, sandoz, DRL,Zydus,emcure and cipla
launched in india,
9
ranibizumab ( lucentis)
biosimilar
FY 25
1200
roche ( innovator)coherus, and 2 more in process
10
denosumab ( prolia, xgeva)
biosimilar
?
6000
amgen (innovator),no biosimilar in pipeline, 6 biosimilar in process , lupin not in sight
11
pertuzumab ( perjeta)
biosimilar
?
3000
genetech innovator, no biosimilar approved, 6 biosimilar in pipeline, lupin not in first lot
12
afibercept ( eylea)
biosimilar
4000
regeneron , none approved but several biosimilar in pipeline, lupin not visible in first lot
Lupin’s novel drug program seems to be on track. They concluded their third milestone payment ($50 mn for MEK product with Boehringer). Here is a broad timeline of the major developments thus far.
NCE program is focused on oncology, immunology, and metabolic disorders
MALT1 AbbVie partnership (Q3FY19): Received $30 mn upfront, milestone payments upto $947 mn + royalty on sales
MEK Boehringer partnership:
o MEK inhibitor compound is planned for clinical development in combination with Boehringer Ingelheim’s KRAS inhibitor pipeline to address KRAS-driven cancers
o 04-09-2021: Received $20 mn upfront, milestone payments up to $700 mn + double digit royalty on sales
o 27-05-2021: Received $50 mn milestone payment
gBrovana has been launched in US, this is their second respiratory product after gProair. The other major US launch for FY22 is perforomist, hasn’t got approval yet.
Application for pegfilgrastim has been filed in US, they will be the 6th player in the market. Price erosion is >40% over the last 3-years and the current biosimilar adoption is ~36% of overall market. Biocon has struggled getting barely 8% market share since launch (in Sept 2018).
Disclosure: Invested (position size same as before)
Excluding in-licensing income, gross and EBITDA margins declined. US sales were impacted due to competition in one major product (famotidine), penalty due to failure to supply, slower albuterol ramp-up (strategy of bolstering longer term customers rather than spot sales) and a little bit pricing pressure on base business (especially due to aggressiveness from newer Indian players)
Expect significant improvement in US performance in H2FY22 to $200mn/quarter. Target 18-20% market share in albuterol by end of FY22 (currently ~12%)
Target margins of 18% in FY22
Lower gross margins is partly due to change in accounting, earlier partnership royalty was charged in SG&A which is now being charged in gross margin line
Conversation about vaccine partnership has not made any significant progress
Long term strategy is to go deep in 10 key markets (India, US, Australia, Philippines, South Africa, Brazil, Mexico). Also interested in making an acquisition in China
Target is to get quarterly US revenues above $200mn and maintain it
Oncology and biosimilar programs: Looking to get funds from outside investors over the next 18 months. 2 onco assets in IND stage and 5 programs currently in development. Currently impacting EBITDA by ~$65mn through marketing and R&D spends
R&D will be maintained at the same amount (if revenue grows, it should stabilize at 9% of sales)
Biosimilar: Will do capex on microbial side, well placed on the mammalian side
Material products for US markets in FY23: Suprep, sevelamer, revlimid
