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healthcare | IST

Will look at entire organisation footprint from cost optimisation lens, says Lupin

Lupin, India’s second-largest drug maker is embarking on a global across-the-board cost optimisation drive to deal with diminishing margins.
The company posted a net loss of Rs 783.5 crore in the fourth quarter due to a one-time impairment provision made on certain intangible assets related to the Gavis acquisition in the US.
The Gavis assets were not performing up to the anticipation and it was an expensive asset to acquire," said Vinita Gupta, CEO of Lupin.
“We are not very happy. Changes in the US market dynamics and changes in generics industry impacted the business," she said.
Gavis did help the company to enter the women’s health business and expand complex generics portfolio," Gupta said and added that Lupin had grown the portfolio in the last two years.
Lupin, like other generic drug makers has been struggling with extreme pricing pressure in the US market and in turn seeing margins shrink.
Still there is 9-10% price erosion across the board, said Kamal Sharma, vice chairman of the company.
Sharma added that Lupin is not in that state of disarray as regards margins. “Even today our EBITDA margins is 21.5%, which from our standard is not as great as we would love it to but I do not think one has to be apologetic about it,” He said
But the company that has looked at rationalising its R&D spends to save costs and conserve margins is now looking at a broader exercise.
“We do want to take that one time scan of all markets and products we operate in," said Nilesh Gupta, MD and adding that Lupin is not going to do anything as a kneejerk reaction, but it has to be cognizant.
"If the US starts going to a place where complex generics make sense, not regular generics then do you spend the same amount on R&D," asked Nilesh.
"If Japan goes into deep price cut, do you still build on that, do you build on speciality. So these are the questions that we are seeking to answer and then we want to look at the entire organisation footprint," he added.
Nilesh is confident of that the company will able to maintain margins at 21% in FY19.