Lupin Ltd. is poised for its biggest drop in more than two years after brokerages including Credit Suisse Group AG cut their recommendation on the stock of the drugmaker controlled by Indian billionaire Desh Bandhu Gupta.
The shares slumped 4.6 percent to 766.55 rupees at 1:22 p.m. in Mumbai, heading for their steepest decline since Jan. 28, 2011. The benchmark S&P BSE Sensex rose 0.5 percent. Mumbai-based Lupin was downgraded to neutral from outperform at Credit Suisse, while IIFL analyst Bino Pathiparampil lowered his recommendation to reduce from add. The stock closed at a record 806.9 rupees on May 15.
Competition will intensify for Lupin after Mylan Inc. started sales of the generic form of TriCor, an anti-cholesterol drug, which accounts for about 20 percent of the Indian drugmaker’s profit, Credit Suisse analysts Anubhav Aggarwal and Chunky Shah wrote in a note to clients today.
Lupin’s will see “slowing earnings momentum” over the next two years after the entry of Mylan last week with generic TriCor, Aggarwal and Shah wrote in the report. High dependence on two products, TriCor and antibiotic Suprax, make the “risk-reward appear unfavorable,” they wrote.