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Lupin acquires majority stake in Kyowa

Indian generics company Lupin completes arrangements to acquire a significant majority stake in Kyowa Pharmaceutical, a Japanese generics company

Indian generics company Lupin has completed arrangements to acquire a significant majority stake in Kyowa Pharmaceutical, a Japanese generics manufacturer.

Financial details were not disclosed.

Kyowa, which posted FY06 sales of JPY 7.4bn in FY06, develops, manufactures and markets a range of generics in Japan. The company has a strong product portfolio in the psychiatry and neurological therapeutic categories, as well as in cardiovascular, respiratory and allergies and digestive system areas.

Lupin's acquisition activity has been moderately intense. In 1988, it acquired the generics business of Boehringer Manheim, which expanded its range of psychiatric products. The company then bought Bayer's Ospolot business, the sales business of Uji Pharmaceutical and then the sales rights to all prescription drugs of MG Pharma.

Lupin posted Q1 FY07 revenues of INR 6.2bn, a rise of 27 per cent from revenues of INR 4.9bn in Q1 FY06. Export revenues in the quarter were INR 3bn, an increase of 52 per cent on the previous year. Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) were INR 1.2bn, compared with INR 833m, a rise of 43 per cent on Q1 FY06.

Lupin may have to wait before it sees any benefits from the acquisition. Takeda, Eisai, Mitsubishi and Astellas already dominate the local drug market, resulting strong existing competition. Indian companies, such as Strides Arcolab, Ranbaxy and Zydus Cadila, are also present in Japan.

Recent regulatory amendments in Japan have now made it simple for overseas companies to market their products in the region. Non-Japanese companies can now farm out the manufacturing process even if they do not operate their own production facilities in the country.

In 2005, Lupin signed an agreement with Kyowa to market finished formulations in Japan.

Dr Desh Bandhu Gupta, CEO of Lupin, said: "This is a very significant part of our strategy to tap leading global markets and establishes a beachhead in the second largest pharmaceutical market in the world. Kyowa has major strengths in product development, manufacturing and marketing of its products nationwide."

"Lupin will be able to add significant value through its strengths in R&D and global marketing, leading to major synergies. The acquisition is a signal of our long-term commitment to the Japanese healthcare market," added Gupta.

30th September 2008

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