Lupin to acquire Gavis Pharma for Rs 5,610 crore

Lupin will acquire Gavis Pharmaceuticals for Rs 5,610 crore in what the country's fourth-largest drugmaker by sales claimed on Thursday is largest by a domestic pharma firm in the US. The acquisition will help Lupin increase presence in the US, its largest market where sales fell 31 per cent to $180 million in the first quarter. Lupin's US growth has been hampered by a slower pace of winning generic drug approvals since the US Food and Drug Administration (USFDA) overhauled its generics review process.

"Buying Gavis would give it access to 66 generic drugs for which the New Jersey firm has sought approval, representing a potential market value of $9 billion", Lupin said. Gavis will contribute to Lupin's earnings in the first full year after purchase. "The company has entered into a definitive agreement to acquire privately held Gavis Pharmaceuticals LLC and Novel Laboratories (Gavis) subject to certain closing conditions in a transaction valued at $880 million, cash free and debt free," Lupin said in a statement.

"Gavis' New Jersey-based manufacturing facility will become Lupin's first manufacturing site in the US", it added. Lupin chief executive officer (CEO) Vinita Gupta said, "This is a pivotal acquisition for Lupin as it aligns with our goal to expand and deepen our US presence." Gavis founder-CEO Veerappan Subramanian said, "This is a time of globalisation for the specialty pharmaceutical industry ... I am confident that the combined entity will be a powerhouse in the US specialty space and will significantly enhance Lupins US platform." Meanwhile, shares of Lupin tanked more than five per cent after it reported 15.96-per cent slump in consolidated net profit for the quarter ended June.

The stock dipped 5.23 per cent to Rs 1,728.60 on the Bombay Stock Exchange (BSE). The stock was the top loser among the 30-blue-chip Sensex components. On the National Stock Exchange (NSE), the scrip slipped 5.24 per cent to Rs 1,728.25. Lupin's market valuation declined by Rs 4,293.91 crore to Rs 77,767.09 crore.

"For Q1 FY16, the company announced numbers lower than expected," said Sarabjit Kour Nangra, vice-president (research-pharma), Angel Broking. The slump in profit was mainly on account of decline in its overseas sales.