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Lupin Laboratories in Top 5 Pharma Companies

June 5, 2008

Lehman Brothers has initiated coverage on Lupin Laboratories as the company enters the big 5 league in Indian pharmaceuticals. Lupin has successfully scaled up operations in India and the US and has now attained critical size and hopes to be a $1bn company in Fy2008-09.

Lupin has reduced its dependence on anti-tuberculosis and cephalosporin products over the years. It has enhanced its presence in the chronic segment instead, with cardiovascular and respiratory segments being the growth divers. Its anti-infectives therapy, which accounts for 22% of domestic formulation sales.

Lupin’s sales from the US were $178 mn within 3 years of operations. Lupin has been gaining market share in very competitive products. On the R&D front, Lupin is developing NCEs and NDDS-based products. It is currently conducting additional clinical trials for anti-psoriasis molecules.

Lehman is OVERWEIGHT on Lupin with a 12 month target price of Rs 936 at FY10 P/E of 16x based on DCF Model. CAGR for Lupin is expected to be 25% between FY08 and FY10.

We recommend investors to add the stock around Rs 625 levels.

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