The product will be manufactured at Lupin’s Pithampur facility in India. According to IQVIA MAT estimates for November 2024, the reference drug had annual US sales of approximately USD42mn. This latest FDA approval underscores Lupin’s commitment to expanding its footprint in the competitive US market and enhancing its portfolio of high-quality, affordable generic medications.
Founded in 1968 and headquartered in Mumbai, Lupin has established itself as a major player in the pharmaceutical industry, with a presence in over 100 markets worldwide. The company’s extensive product range includes branded and generic formulations, complex generics, biotechnology products, APIs, and OTC products across various dosage forms and therapeutic categories.
Lupin ranks as the 12th largest generic pharmaceutical company globally by sales, the 3rd largest in the US by prescription volume, and the 7th largest in the Indian Pharmaceutical Market by sales. The company operates 15 production sites and 7 R&D centers across India, the US, the Netherlands, Brazil, and Mexico.
Geographically, the US contributes 36% of Lupin's FY24 sales, followed by India at 35%, and other regions at 29%. Lupin employs approximately 23,000 people.
Lupin thrives amid global pharma trends
The global pharmaceutical industry is undergoing rapid transformation, with medicine consumption expected to reach 3.8 trillion daily doses by 2028 and specialty medications projected to account for over 40% of spending in the next four years. Amidst this dynamic landscape, Lupin has strategically positioned itself for growth and innovation.
In the US, where the pharmaceutical market was valued at USD446bn in 2023, Lupin has demonstrated resilience despite intense competition and a deflationary environment. The company ranks third in prescription volume and is continuously expanding its portfolio and pipeline. Lupin is focusing on advanced platforms such as inhalation therapies, biosimilars, and injectables, while maintaining robust product lines in traditional areas like oral medications, ophthalmic solutions, and dermatology treatments.
In India, Lupin has outpaced market growth by expanding into chronic and rapidly growing therapeutic areas. This strategic focus on providing affordable, high-quality medications has solidified Lupin’s position as the seventh-largest pharmaceutical company in the country. Looking ahead, Lupin aims to deliver innovative brands and achieve above-market growth through both organic and inorganic strategies, while also establishing strategic market adjacencies.
Lupin’s robust presence in emerging markets such as the Philippines, Brazil, and Mexico, along with its expansion into Europe and Australia, enables the company to capitalize on regional growth opportunities. This strategic global footprint positions Lupin to navigate the evolving pharmaceutical landscape effectively.
Impressive growth, yet trails behind Peers
Lupin has demonstrated impressive growth from FY21 to FY24, with revenue increasing at a CAGR of 9.7%. This robust performance has been driven by new product launches and strong results in key markets. The company's operating income surged by a higher CAGR of 16.5% due to successful cost optimization initiatives, leading to a margin expansion from 11.5% in 2021 to 13.9% in 2024. Net profit also saw a significant rise, with a CAGR of 16.3%.
Lupin's strong operating position has bolstered cash flow from operations, which reached INR36.5bn in 2024, up from INR18.2bn in 2021. Despite increased capex, FCF improved to INR27.2bn in 2024 from INR11.4bn in 2021. Additionally, net leverage improved to 0.2x in FY24 from 0.4x in FY21, reflecting the company's strengthened financial health.
However, despite these gains, Lupin still lags behind its local peers, Sun Pharma and Cipla. Sun Pharma reported a revenue CAGR of 13.1% and an EBIT margin of 21.7%, while Cipla showed a revenue CAGR of 10.1% and an EBIT margin of 20.9% as of FY24, both surpassing Lupin's performance. As Lupin continues to build on its growth trajectory, the company faces the challenge of closing the gap with its more successful competitors. The company remains focused on leveraging its strategic initiatives and operational efficiencies to enhance its market position and drive future growth.
Growth potential amid attractive valuation
Over the past year, Lupin has witnessed a remarkable surge in its share price, climbing by an impressive 41.0%. This significant uptick reflects the underlying strength of the company, bolstered by its robust financial performance and strategic market positioning. Currently, Lupin is trading at a P/E of 30.5x, based on its projected EPS of INR67.4 for FY25. This valuation is notably below the global peer average P/E of 33.8x, indicating a potential undervaluation of the stock. Comparatively, while Lupin's P/E ratio is higher than that of Cipla at 23.8x, it remains lower than Sun Pharma at 36.3x.
Furthermore, Lupin's current P/E multiple is significantly below its three-year historical average of 48.5x, suggesting that the stock is undervalued relative to its past performance and its global peers. This presents an attractive opportunity for investors seeking exposure to a company with strong growth potential, currently priced lower than some of its local and global counterparts.
Analyst sentiment towards Lupin remains largely positive. Out of the 36 analysts covering the stock, 19 have issued a "Buy" or "Outperform" rating, 10 have a "Hold" rating, and 7 have a "Sell" or "Underperform" rating. The average target price set by these analysts is INR2,249, implying an 10% upside potential from its current trading price.
Overall, Lupin’s concerted efforts to expand its product portfolio, which now boasts a pipeline of over 50 complex products, coupled with its ambition to enhance its global footprint, have positioned it favorably for sustained growth in the coming years. The company's robust financial performance and attractive valuation metrics have made it a compelling investment opportunity. However, key risks include potential delays in product launches specially gJynarque (tolvaptan) due to regulatory hurdles, unanticipated market share losses in gSpiriva and issues from FDA inspections at key facilities.