Lupin Studied Possible Wockhardt Deal, No Talks Ongoing

Lupin Ltd. (LPC), India’s second-largest drugmaker by market value, studied Wockhardt Ltd. (WPL) as a potential acquisition candidate, although it hasn’t met with the company’s management and isn’t now holding talks.

“There are some synergies, and there’s a lot of duplication with Lupin,” Managing Director Nilesh Gupta said in an Aug. 22 interview in Mumbai. “ We’ve certainly looked at it. It doesn’t hurt to always do that kind of analysis.”

Sun Pharmaceutical Industries Ltd. (SUNP), India’s biggest drugmaker, in April announced plans to buy Ranbaxy Laboratories Ltd. (RBXY) in a $3.2 billion deal to boost its presence in emerging markets. Wockhardt currently has a market value of about 78.9 billion rupees ($1.3 billion), according to data compiled by Bloomberg.

“In many ways if you look at the Sun-Ranbaxy deal, at one level Sun is obviously paying top dollar, but they’ve added $2 billion to their revenues –- it’s pretty tough to add $2 billion dollars to your revenues,” Gupta said. “From that perspective, I would personally find the Wockhardt deal interesting, but there really are no talks going on at all.”

Wockhardt “completely denies that it has any intention whatsoever to divest its business,” spokesman Dominic D’Souza wrote in an e-mailed response to questions.

Shares of Wockhardt rose 2 percent to 718.45 rupees at 2:20 p.m. in Mumbai trading. Lupin rose 0.6 percent. That compares with a 0.5 percent rise in India’s benchmark S&P BSE Sensex.

FDA Ban

Mumbai-based Wockhardt was a major supplier of a generic version of the heart drug Toprol XL in the U.S. before the Food and Drug Administration last year banned two of its Indian factories from manufacturing for the U.S.

“You need to deal with a troubled asset very differently,” Gupta said. “You really have to see, can I work with these plants, can I work with these people, or do I just shut all of this down? And we’re at least not of the mindset of shutting things down. We have been building, building, building –- You get into that groove.”

Outside India, Lupin could be interested in buying a small portion of GlaxoSmithKline Plc (GSK)’s mature drugs portfolio that’s for sale, Gupta said. Lupin would only be interested in the U.S. brands within the portfolio, he said, declining to comment on specific products that are of interest.

It will also consider other, similar asset purchases and plans to expand through a “series of deals” in the $100 million to $400 million range, he said. The company had about $69 million in cash and near-cash items at the end of the fiscal year that ended on March 31., according to data compiled by Bloomberg.

Glaxo Portfolio

Glaxo, the U.K.’s biggest drugmaker, is selling a collection of its mature drugs with combined annual revenue of about 1 billion pounds ($1.66 billion), including Paxil, an anti-depressant, and Malarone, for malaria. The company is open to selling the drugs piecemeal, and may not sell anything if it doesn’t get the price it wants, Chief Executive Officer Andrew Witty said in a conference call in July.

Glaxo spokesman Simon Steel declined to comment on Lupin’s interest. Lupin is also seeking to acquire companies specializing in complex generics and specialty areas in the U.S., Europe and Japan, Gupta said. The Mumbai-based company earned about 43 percent of its revenue in the U.S. during the last fiscal year and has said that it wants to bolster its branded business there.

Drug portfolios can often be “sliced and diced —- where somebody is more interested in Europe, somebody is more interested in Latin America, somebody is more interested in the U.S. –- and you can split it two or three ways,” Gupta said. “The brand companies themselves are open to splitting it up and selling it as well. So, we’d always be looking at assets of that sort, but you’d look at that pretty critically.”

Nilesh Gupta is the son of billionaire Desh Bandhu Gupta, who founded Lupin in 1968

To contact the reporter on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net

To contact the editors responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net Brendan Scott

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