USFDA issues 13 observations after inspection of Lupin arm's facility in US

 Drug firm Lupin on Monday said the US health regulator has issued 13 observations after inspection of its subsidiary's Somerset facility in New Jersey.

In a regulatory filing, Lupin said the inspection by US Food and Drug Administration (USFDA) commenced on September 10, 2020, and concluded on November 5, 2020. The duration of the inspection was prolonged due to COVID-related delays and challenges.

The inspection has closed with 13 observations, it said.

"We are confident of addressing these observations and will work closely with the agency to address their concerns," the company said.

Lupin said it does not believe that this will have an impact on disruption of supplies or the existing revenues from operations of this facility.

The facility contributes less than 5 per cent of our global revenues, it added.

Shares of Lupin were trading 0.52 per cent lower at Rs 911.60 apiece on BSE.

Lupin gets EIR from USFDA for Florida-based inhalation research centre

Drug maker Lupin on Monday said it has received an establishment inspection report (EIR) from the US health regulator for its inhalation research centre in Florida.

The facility was inspected by the US Food and Drug Administration (USFDA), between February 19, 2020, and February 26, 2020, on behalf of the UK Medicines and Healthcare Products Regulatory Agency (UKMHRA) for company's application for generic Fostair.

"The receipt of the EIR with satisfactory voluntary action indicated' status validates our commitment towards ensuring the highest levels of quality and current good manufacturing practice compliance at all our sites," Lupin Ltd CEO Vinita Gupta said in a statement.

The Inhalation Research Center at Coral Springs, Florida, inaugurated in August 2015, focuses on research and development of respiratory products for the treatment of asthma, chronic obstructive pulmonary diseases and other respiratory ailments.

"We are grateful for the USFDA's confidence in our team during this critical juncture in the fight against COVID-19, when it has become imperative that we focus on bringing high quality respiratory products to market," Gupta said.

USFDA issues an EIR to the company when an inspection is satisfactorily closed.

Lupin falls 3% as USFDA issues 5 observations for Vizag facility

Shares of Lupin slipped 3 per cent to Rs 742 on the BSE on Monday in the intra-day trade after the drug company said it has received five observations from the US health regulator after inspection of its Vizag facility in Andhra Pradesh.

“The United States Food and Drug Administration (USFDA) carried out the inspection of the company’s Vizag API manufacturing facility between January 13, 2020 and January 17, 2020. The inspection for the API facility at Vizag closed with five 483 observations,” Lupin said in an exchange filing on Saturday.

“We are fully committed to adherence with CGMP regulations and uphold high quality standards across all our manufacturing sites. We are confident of addressing the observations to the US FDA’s satisfaction," said Nilesh Gupta, Managing Director at Lupin.

.

In a separate regulatory filing, Lupin said Monday that it has successfully concluded the third edition of its series of medical symposiums for the Indian urology community.

Analysts at JP Morgan expect the Lupin stock to be volatile in CY20, with USFDA inspection-related news flow for its four facilities that are under Official Action Indicated (OAI)/Warning Letters (WL).

“Lupin’s US business has bottomed, with the launch of Levothyroxine likely to support ramp-up over the next few quarters. Thereafter, the US will be supported by gProAir approval (likely in FY21). However, margin improvement from both these launches and its cost optimization efforts are factored in to our FY21-22 estimates and current valuations. Post-Japan divestment, leverage should improve significantly, in our view, but focus should increase on capital allocation, particularly for M&A,” the foreign brokerage firm said in a company update with ‘neutral’ rating on the stock.

Lupin launches generic drug in US for treatment, prevention of hypokalemia

Pharma firm Lupin on Tuesday said it has launched in the US generic potassium chloride for oral solution used for treatment and prevention of hypokalemia.

The company had earlier received approval for the product from the United States Food and Drug Administration (USFDA), Lupin said in a statement.

Lupin's potassium chloride for oral solution USP, 20 mEq, is the generic version of Pharma Research Software Solution LLC's potassium chloride for oral solution USP in the same strength, it added.

As per IQVIA MAT September 2019 data, potassium chloride for oral solution USP, 20 mEq had an annual sale of around USD 90 million in the US, Lupin said.

The product "is indicated for the treatment and prophylaxis of hypokalemia with or without metabolic alkalosis in patients for whom dietary management with potassium-rich foods or diuretic dose reduction is insufficient," it added.

Shares of Lupin were trading at Rs 747 per scrip on the BSE, up 0.09 per cent from the previous close.

Lupin no longer bullish on Japanese market as price rules prove a dampener

Pharmaceutical major Lupin stayed invested in Japan when most Indian peers quit. Its Japanese subsidiary has grown at a 15 per cent compounded annual rate in the past decade.

However, with stringent price regulations, Japan has become an unattractive market for Lupin, which is no longer bullish on it.

In a recent candid chat with Business Standard, managing director Nilesh Gupta had said that from a volume perspective, the Japanese market keeps growing at 10 per cent yearly but from a value perspective, the growth is single-digit at best. "The main reason (behind this) is the price cuts - from once in two years, it is now once every year. There is a lot of pain in that market. We are not bullish on the market -- it will grow at a rate which is lower than the company's growth rate. The profitability is a bit lower than the average profitability at the company," Gupta had told us.

Its gameplan in Japan now, he felt, had to be on improving vertical integration, on achieving efficiencies in both R&D and manufacturing for that market. "We manufacture a lot of products for the Japan market at our Goa plant. The intent is now to make it more vertically integrated. Our goal is to accelerate vertical integration for our products where we don't do active pharmaceutical ingredients (APIs)," Gupta had said.

Lupin did not officially comment on this matter, as it is in the legal 'silent period' before announcing its quarterly results.

Analysts say margins in the Japanese market are 8-10 per cent. With the pricing pressure increasing, these are in for a further squeeze. "The pressure has intensified there, especially over the past on year," says Deepak Malik of Edelweiss.

Kyowa, Lupin's Japanese subsidiary, had sales of Rs 1,784 crore, with profit after tax of Rs 68.6 crore, says the 2018-19 annual report. The profit, however, is down 54 per cent year-on-year. Lupin acquired Kyowa in 2007 and grew it to rank sixth in 10 years. In 2018-19, Japan contributed around 11 per cent of Lupin's consolidated turnover.

Lupin has for some time been focusing on rationalisation in the Japanese market. Gupta had in the March quarter earnings call said the company had taken significant cuts in research and development and sales force, in the US and Japan.

He added that the market in Japan, the company's third-largest, had been fairly flat over the past five years. "However, within the Japanese pharma industry, the generics market has grown, driven by the measures that the government had put in place to drive generic utilisation. Pricing pressures are here to stay in Japan. We have worked hard to improve our margins in Japan through back-ending products into India, where we get better end-to-end margins. Additionally, we have right-sized our infrastructure in Japan, based on current market needs, to really help in the interim," Gupta had told investors then.

Lupin had divested its Japanese injectables business to Neo ALA Co, a wholly-owned subsidiary of Abu Dhabi-based Neopharma Group in August, in a bid to streamline operations in the country.

Most Indian players have exited Japan in the past decade. Ranbaxy was one of the early entrants. It exited its joint venture with Nippon Chemiphar in December 2009. Dr Reddy’s Laboratories, Orchid Chemicals and Cadila Healthcare wound up their Japanese business in the following years. They did not find it made strategic enough sense to stay invested in a highly regulated market, where margins were comparatively lower than in other developed markets.

Said a senior official of a firm which exited the Japan market some years before, "The regulatory landscape in Japan has been changing. The government wants nearly 80 per cent of the pharma market there to be of generic drugs by 2020. More recently, it decided to revise drug prices every year, which has led to price erosion of seven to eight per cent. It is a difficult market. One has to choose wisely when it comes to business decisions."

Japan is the third-largest pharmaceutical market in the world, with sales of $91 billion (at National Health Insurance prices). The Japanese pharma market is forecast to drop at a compounded annual rate of 1.4 per cent over the next five years. Generics utilisation rate in the country reached 74.7 per cent in volume terms as of December 2018. It is expected to achieve the 80 per cent generics utilisation goal by 2020-21.

In FY19, Japan contributed 82 per cent to the Asia-Pacific region revenues of Lupin.

Lupin posts 49% jump in Q1 net profit on the back of strong US sales

Pharma major Lupin on Wednesday posted a 49.5 per cent year-on-year (YoY) jump in its net profit for the quarter ended June 30, 2019 (Q1FY20), on the back of a 15.4 per cent rise in sales.

The company's stock reacted positively to the Q1FY20 results, and was up 4.1 per cent at day's close on the BSE at Rs 781.75 a piece.

The company posted sales of Rs 4,355.8 crore in Q1FY20, marginally up from the previous quarter. However, on a YoY basis the growth was 15.4 per cent. The earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter was Rs 9,32.5 crore compared to Rs 7,11.2 crore in Q1FY19, up 31 per cent. On a sequential basis, however, the Ebitda dipped 2.7 per cent. Net profit stood at Rs 303.1 crore, up 49.5 per cent YoY.

"This year is critical as we are committed to delivering on our strategic growth drivers, including commercialization of Complex Generics, ramp-up of our Specialty business and delivering on operational and cost efficiencies. Regulatory compliance remains a top organizational priority and we are making steady progress," Lupin's MD Nilesh Gupta noted.

The US market (which accounted for 35 per cent of sales) saw a 30 per cent YoY growth in sales to $218 mn (Rs 1,541 crore). It was down 11 per cent sequentially in constant currency terms as Q4FY19 included one month exclusive sales of generic Ranexa (anti-angina drug) versus just 15 days in Q1FY20. The company launched five new products during the quarter in the US. 

In the earnings call, Lupin indicated that pricing pressure in the US market has started to ease. "Market has stabilised in terms of pricing pressure in the US. A number of manufacturers exited products which did not make business sense for them and companies have also rationalised their product filings and launches, which too has helped," a spokesperson said.

India sales grew 9.7 per cent YoY to Rs 1,307 crore, while Asia Pacific region sales grew by 11 per cent (of which Japan grew by 9 per cent YoY and Philippines declined 8 per cent in constant currency terms). India business saw a strong sequential growth of 24 per cent due to a low base in Q4FY19 (year-end inventory clearance), said Krishnanath Munde, analyst with Reliance Securities.

India accounted for 30 per cent of Lupin's overall sales, while APAC accounted for 15 per cent of the drug major's sales. While Latin America sales grew 23 per cent, sales in Europe, the Middle-East & Africa (EMEA) declined by 5.7 per cent.

The sales of active pharmaceutical ingredients (APIs) was down 2.6 per cent YoY to Rs 348.9 crore. It was, however, up 20 per cent sequentially.

Edelweiss analyst Deepak Malik noted that the company achieved tight control on costs with R&D down to 8.6 per cent from 9.7 per cent of sales in Q1FY19. Other expenses, too, declined to 18.6 per cent of sales from 19.4 per cent in Q1FY19, he noted.

The company said that investment in R&D for the quarter was Rs 3,78.5 crore representing 8.7 per cent of sales. Cost of material increased by 310 basis points to 35.6 per cent of sales at Rs 1,550 crore. Personnel costs increased by 7.7 per cent YoY during the quarter to Rs 807.2 crore. However, as a percentage of sales, it fell from 19.4 per cent in Q1FY19 to 18.5 per cent of sales in Q1FY20. Manufacturing and other expenses decreased by 310 basis points sequentially to 27.6 per cent of sales at Rs 12,00.9 crore compared to Rs 13,26.6 crore in Q4FY19.

Malik, however, said,"Tax rate remained elevated at 43 per cent due to unabsorbed losses at subsidiaries, partly offsetting the margin operating cost controls."

Lupin recalls more than 18,000 bottles of antibiotic drug in US market

Drug maker Lupin Ltd is recalling more than 18,000 bottles of an antibiotic drug used to treat bacterial infections from the US market.

Lupin Pharmaceuticals Inc, the US unit of the Indian company, is recalling the drug due to a “complaint received of metal piece identified in the product bottle prior to the reconstitution,” according to information on the US Food and Drug Administration, or USFDA, website.

The drug, cefdinir for oral suspension, has been manufactured by Lupin’s Mandideep manufacturing facility in central India.

The USFDA has classified it as a Class-II recall, which is initiated when use of or exposure to a violative product may cause temporary, or medically reversible adverse health consequences, or where the probability of serious adverse health consequences is remote.

Lupin to review US lawsuit accusing it of price fixing, customer allocation

Drug maker Lupin said on Wednesday that it is reviewing the details of a lawsuit filed in a US court accusing 21 generic medicine producers of hatching a conspiracy to fix prices.

"We have received a copy of the lawsuit filed gainst the generic drug manufacturers and are reviewing details of the same," Lupin Ltd said in a regulatory filing.

"The company has been a key pharmaceutical player in the US and has demonstrated full commitment to compliance with all laws and ethical business practices," it added.

The Mumbai-based drug firm along with various other domestic companies like Sun Pharma, Dr Reddy's Laboratories and Wockhardt are among the 21 generic pharmaceutical firms and 15 other individual defendants against whom the Attorneys General of 49 US states, the Commonwealth of Puerto Rico and the District of Columbia had filed a complaint with respect to 116 generic drugs in the US District Court for the District of Connecticut.

The companies have been accused of violating antitrust laws by fixing prices and allocating customers.

Lupin shares were trading 3.66 per cent down at Rs 779.50 apiece on the BSE.

Lupin gets four observations from USFDA for pharmacovigilance inspection

Drug firm Lupin on Tuesday said it has received four observations in the establishment inspection report (EIR) given by the US health regulator following the closure of pharmacovigilance inspection.

"The inspection included a comprehensive scrutiny of practices and procedures for reporting of adverse events of Lupin's marketed products worldwide. The inspection closed with four observations," the company said in a regulatory filing.

Lupin has received the EIR from the United States Food and Drug Administration (USFDA) for the post-marketing adverse drug experience (PADE) inspection, indicating successful closure of the inspection, the filing added.

The inspection was conducted at its global pharmacovigilance group DSRM (Drug Safety & Risk Management) based out of Mumbai between January 14-18, 2019, Lupin said.

The USFDA issues an EIR to an establishment that is the subject of an FDA or FDA-contracted inspection following the closure of the inspection.

Shares of Lupin Ltd were trading 0.18 per cent higher at Rs 802.80 apiece on BSE.

Lupin gets govt nod for more time to complete project in Indore SEZ

The government has approved a proposal of drug firm Lupin to take more time for completion of its project at Indore special economic zone (SEZ) with proposed investment of Rs 205.69 crore.

The decision to give more time was taken by the the Board of Approval (BoA) in its meeting on April 22 here. BoA is an inter-ministerial body, headed by the Commerce Secretary. It is the highest decision-making authority of SEZs.

"The board, after deliberations, approved extension of the validity of the LoP (letter of permission) up to April 11, 2020," the minutes of the BoA meeting said.

The company is setting up its pharma unit in Indore SEZ to manufacture pharmaceutical formulations metered dose inhalers and dry powder inhalers.

It has requested for extension of letter of permission (LoP) beyond April 11, 2019, for one year up to April 11, 2020.

It had received the LoP on April 12, 2016, extended twice till April 11 this year.

The development commissioner (DC) of Indore SEZ had recommended the company's request to BoA as the unit has made expenditure of Rs 43.11 crore till March 28 and the construction activities are in full swing and, are expected to be completed by November 2019.

The unit has expressed its commitment to commence production before March 2020.

The company has stated that the delay in apportionment of land resulted in delayed start of the project.

As per the SEZ rules, DC is authorised to grant extension of validity of LoP beyond second year of expiry of the original validity. However, it is subject to a condition that two-thirds of the activities including construction relating to setting up of the unit is complete and a chartered engineer's certificate to this effect is submitted by the entrepreneur.

If these conditions are not met, then the unit has to approach the BoA for seeking more time.

Further, the Board of Approval has granted in-principle to a proposal of L&T MBDA Missile Systems Ltd for setting up of an SEZ unit in Aspen Infrastructure Ltd for assembling, integration, functional testing of missile sub systems and missile weapon systems.

Similarly, a proposal of Tata Power Company, SEZ unit under Cochin SEZ, for grant of industrial licence for manufacture of defence aircraft for military applications.