Lupin Limited - India's Leading Pharma Company

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Case Details:

Case Code : BSTR191
Case Length : 12 Pages
Pages Period : 1998-2005
Organization : Lupin Laboratories
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Themes : Growth Strategy
Industry : Pharma and Biotech

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Lupin Laboratories is undergoing an aggressive restructuring exercise, which will sharpen its strategic focus, improve the financial structure and reposition it as one of the leading players in the Indian pharmaceutical industry."1

- Kavita Gupta, Director, Corporate Development, Lupin Limited in November 1999.


In April 2004, Lupin Limited (Lupin) became the first Indian pharmaceutical company to receive an ANDA2 approval for Cefixime3. The company subsequently launched its first branded product - anti-infective Suprax (Cefixime Oral Suspension) in the US.

With the launch of Suprax, Lupin was catapulted to a different league, setting it apart from other pharmaceutical companies selling only active pharmaceutical ingredients (APIs)4 and generics5. Headquartered in Mumbai, Lupin is a leading pharmaceutical company in India manufacturing bulk drugs and formulations6. In the fiscal 2004-05, Lupin generated sales of Rs. 12,123 million, 4% more than in the previous fiscal and reported net profit of Rs. 844 million as compared to Rs. 987 million in the fiscal 2003-04. About 52% of Lupin's revenues came from the domestic market while 48% came from exports. Anti-TB (tuberculosis) drugs, cephalosporins and cardiovasculars contributed to about 89% of its revenues while 11% came from markets such as nutraceuticals7 and other therapeutic segments8.

Founded in 1968 with an initial capital of just Rs. 5000, Lupin witnessed significant growth to become a large, Rs 3 billion plus organization in the early 1990s. The company had grown at an average annual growth rate of 40% since its inception, twice as fast as the growth of the Indian pharmaceutical industry.

Lupin aimed to be among the top three Indian pharmaceutical companies by 2007 and aimed at achieving the US$ 1 billion mark in revenues by 2009. With the product patent regime9 being introduced in India in January 01, 2005, several domestic and foreign pharma companies were expected to change their strategies. To compete with the onslaught of foreign players, major Indian pharma companies started strengthening R&D activities, entered the global generics market, ventured into contract research and started exploring relatively untapped segments like herbals and ayurveda; while already established foreign pharma companies established R&D centers and clinical trial centers in India to cut drug delivery costs.

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1] Datta, Anirudha, Rastogi, Atul, "Winds of Change at Lupin Labs,", November 18, 1999.

2] Abbreviated New Drug Application (ANDA) contains data which when submitted to USFDA's Center for Drug Evaluation and Research, Office of Generic Drugs, provides for the review and ultimate approval of a generic drug product. Once approved, an applicant may manufacture and market the generic drug to provide a safe, effective, low cost alternative in the US market.

3] An antibiotic drug used to treat infection. It belongs to the family of drugs called cephalosporins.

4] API are active chemicals used in the manufacturing of drugs. Another term for API is 'Bulk Drug Substance,' although API is more internationally recognised.

5] Generic drugs refer to 'a copy of an original product whose patent has expired.' It can be marketed as a branded product - that is, with a trade name belonging to the producer or under the generic name of an active compound.

6] Bulk drugs are medically effective chemicals. They are derived from four types of intermediaries or raw materials viz. plant derivatives (herbal products), animal derivatives (e.g. insulin extracted from bovine pancreas), synthetic chemicals and biogenetic human derivatives (e.g. human insulin). Formulations are manufactured from bulk drugs. Formulations are drugs used to cure a disease or disorder in the patient. To prevent misuse/incorrect administration, most formulations are disbursed by pharmacies only under medical prescription and they are called ethical products. However, some formulations such as pain balms, health tonics and drugs out of patent can also be purchased by the users directly. These are called Over-the-Counter (OTC) products. Formulations can be categorized as per the route of administration to patients, viz. oral i.e. tablets, syrups, capsules, powders etc. taken internally. Topical includes ointments, creams, liquids which are applied on the skin. Parenterals are sterile solutions injected in an intravenous or intramuscular fashion and others include eye-drops and surgical dressings.

7] The word nutraceuticals is derived from 'nutrition and pharmaceuticals.' It refers to dietary supplements and/or nutritional ingredients that provide medicinal and health benefits. These are also known as functional foods.

8] Groups of drugs that are used in treatment or therapy. Cardiovasculars, anti-TB, nutraceuticals are examples of therapeutic segments.

9] A patent is a legal protection for an invention. Inventions can be either product inventions or process inventions. A patent too therefore can be either a product patent or a process patent or a combination of both. A patent once granted for an invention is an "intellectual property" and remains in force for a specific period of time (20 years for a product and 7 years for a process patent). If any other person exploits a patent without the prior authorization of the patent holder, he infringes the rights and commits an illegal act. India, till 31 December 2004, followed process patents, i.e. manufacturers could use reverse engineering and produce a product (patented by some other manufacturer) using a different process.


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