homebusiness NewsLupin sees scope in healthcare as an adjacency; says input costs likely to put pressure in Q3, Q4
Lupin sees scope in healthcare as an adjacency; says input costs likely to put pressure in Q3, Q4
In an interview with CNBC-TV18, Ramesh Swaminathan ED and Global CFO, Lupin, said, “We would like to see ourselves beyond just the pharmaceutical space and would like to be seen as a healthcare organization. We are not going to get into hospitals but it is a strategic move, we do see that there is tremendous growth in healthcare segment, that is the reason we are getting into that space. We see it as a useful adjacency.” He further explained, that it is going to be an extremely calibrated move and the company won't take any risk on this front.
Lupin has seven observations handed out to its Goa plant and there are some concerns on US pricing pressure, while the big trigger for the company is their diagnostics segment entry. To discuss this, CNBC-TV18 spoke with Ramesh Swaminathan ED and global CFO of the company.
He said, “We have got into diagnostics. It is actually a business which is hugely fragmented, the organized sector is only 16 percent, so there is tremendous room for growth from our perspective.”
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“We would like to see ourselves beyond just the pharmaceutical space and would like to be seen as a healthcare organization. We are not going to get into hospitals but it is a strategic move, we do see that there is tremendous growth in healthcare segment, that is the reason we are getting into that space. We see it as a useful adjacency,” he further explained.
He added that it is going to be an extremely calibrated move and that there isn’t going to be any risk that the company will be taking on this front.
Swaminathan believes that FDA observations at various plants, US pricing pressure issues are addressable within the foreseeable future.
“We are calibrated about our capital allocation policies,” he said.
According to him, there is margin pressure in the pharmaceutical industry. “There are issues in China concerning supplies from there, so there is going to be some pressure coming in from that quarter,” he stated.
Also Read: Glenmark Life Sciences says rising API raw material costs a worry, co likely to hike price
On pricing pressure in the US, he shared, “There was a tremendous pressure a couple of years ago, essentially because of channel consolidation and after that, we saw a period where things were steady. It is stabilising again, it is in the high single digit so to speak, but if you look at secular trend, it will be about 5-6 percent. So yes, there is pressure if you talk about it but it is also cyclical in some ways and it will settle down.”
The outlook for US market is quite good. The company has got a few products lined up for next year.
There were a number of observations in the Goa plant. He believes all of these observations are addressable. “We are working with the agency. I don’t want to set a timeline for it but it will certainly happen. The good thing was that there were no repeat observations and it is highly addressable. We remain hugely optimistic as far as Goa is concerned,” Swaminathan said.
There has been some cost pressure when it comes to procurement. “We have this China disrupting factor, a lot of our key starting materials (KSMs) are brought in from China and it could mean shortages on various KSMs, it will certainly impact pricing as well, going forward,” he said.
The company has been in a consolidation phase and there is good work happening on that, he noted.
“There are several other moving parts which have worked against us, COVID for sure and also in terms of addressing the FDA-related issues, there has been some time lag. Because of that, we are not able to launch a host of products that we are lined up for in the US,” he explained.
He still remains confident about the future. “The pipeline, our abilities, and the platforms that we are working on – FY22, FY23, we will have some good products, we already have Albuterol which is in the process of ramping up. We are still working on a very rich pipeline for the future,” he said.
For the full interview, watch the accompanying video.
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(Edited by : Dipikka Ghosh)
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