MOSL: LUPIN (Buy)-Prepping for next wave of growth-Takeaways from CEO track

​LUPIN: Prepping for next wave of growth; Takeaways from CEO track

(LPC IN, Mkt Cap USD7.0b, CMP INR1002, TP INR1125, 12% Upside, Buy)

We hosted Mr Nilesh Gupta, Managing Director of Lupin (LPC), as part of 'CEO Track' at our annual conference. Key takeaways:

• Mr Gupta has categorized the evolution of the Indian pharmaceutical industry into Wave 1, Wave 2 and Wave 3. According to him, the India pharma industry is at the end of Wave 2. Although the next two years will pose challenges for LPC in the US, the company will continue focusing on the complex generics, biosimilars and specialty businesses over the medium term.
  
• Mr Gupta believes that the domestic market can continue recording a 12% CAGR in the medium term. However, the overhang related to 1) new draft policy, 2) government's focus on generic-generic and 3) Jan Aushadhi scheme can exert pressure in the near term.
  
• Over 1995-2015, India became a global generic powerhouse, as exports as % of total revenues reached >45%.
  
• India pharma - the road ahead: In the US, channel consolidation can continue exerting additional pressure in the near term, as the last leg of consolidation will get over in the next few months. Also, GDUFA -2 will lead to faster approvals (which, in turn, will create more competition). Filing costs have also increased.