Lupin to Buy Gavis in $880 Million Deal to Expand in U.S.

Updated on

Lupin Ltd. agreed to buy a New Jersey-based pharmaceutical company in a $880 million deal, making its largest ever acquisition as it pushes to expand in the U.S. generic drug market.

The acquisition of closely held Gavis “broadens Lupin’s pipeline in dermatology, controlled substance products and other high-value and niche generics,” the Indian drugmaker said in a statement today.

Generic drug manufacturers in India are seeking U.S. acquisitions to widen their product pipeline. The U.S. Food and Drug Administration’s increased scrutiny of overseas manufacturers has made it harder to get approvals in the world’s biggest pharmaceutical market. Lupin shares dropped the most in three months in Mumbai on Thursday after earnings missed analyst estimates.

“Slowdown in approvals in the U.S. dampened growth during the quarter,” Managing Director Nilesh Gupta said in a statement.

The company reported a 6 percent drop in sales to 30.7 billion rupees ($482 million) in the quarter to June 30, while net income at 5.25 billion rupees fell short of the median 5.74 billion-rupee estimate by analysts.

Shares tumbled 5.3 percent to 1,728.25 rupees, extending losses for a third day. The stock has advanced 21 percent this year, compared with a 3.2 percent gain in the benchmark S&P BSE Sensex index.

Gavis has 66 generic drug applications pending approval with the FDA and a pipeline of 65 products under development. That would add to the 81 products Lupin currently has on the U.S. market.

Lupin earned about 43 percent of its revenue from the U.S. last fiscal year, data compiled by Bloomberg show.

Gavis had sales of $96 million in fiscal year 2014 and its manufacturing facility in New Jersey will become Lupin’s first in the U.S. It is the Mumbai-based company’s fourth acquisition this year.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE