Hyderabad: Lupin Ltd, India’s third largest drug maker, on Tuesday said it has agreed to buy a portfolio of 21 generic brands from Osaka-based Shionogi & Co. Ltd for ¥15.4 billion yen ( ₹ 10.08 billion) or $150 million, to strengthen its presence in the world’s second largest pharmaceutical market.

The acquisition will be effective from 1 December and is subject to certain closing conditions and regulatory approvals, including the transfer of marketing authorization of the products to Lupin’s Japanese subsidiary Kyowa Pharmaceutical Industry Co. Ltd.

Lupin said the 21 products it is acquiring from Shionogi had sales of ¥9,400 million or $90 million collectively in the year ended March, covering therapeutic areas such as central nervous system (CNS), oncology, cardiovascular and anti-infectives.

With this acquisition, Lupin will rank sixth among generic companies in Japan. Currently, the company is ranked ninth and is a market leader in the CNS space well known for its “AMEL" brand, in addition to other generic pharmaceutical products in its portfolio.

“This acquisition marks Lupin’s foray into the Japanese branded market in line with our aspirations to build and strengthen our specialty business globally," said Nilesh Gupta, managing director of Lupin.

“The new branded product portfolio has a strong fit with Lupin’s Kyowa business, as it adds depth and reach to its current CNS portfolio and other therapy areas," Gupta said.

Shionogi, like other big Japanese drug makers, is increasingly focusing on drug discovery and branded portfolio, and has been offloading generic drugs.

“I’m very pleased that this agreement with Kyowa could make both aspects of our mission a reality," said Isao Teshirogi, president and chief executive officer of Shionogi.

“[The acquisition allows] us to pursue innovative drug discovery with an even more intense focus, while ensuring that our high-quality long-listed [generic] drugs continue to be delivered to patients to meet their unmet needs," Teshirogi said.

In June, Shionogi transferred a few oncology drugs to Nichi-Iko Pharma as part of its strategy to divest off patent products.

“The acquisition strengthens Lupin’s business in Japan," said Sarabjit Kour Nangra, vice-president, research, pharma, at Angel Broking Ltd.

“Japan is one key market where other India generic companies struggled to break in," Nangra said.

So far, Lupin Ltd has made two buyouts in Japan: Tokyo-based I’rom Pharmaceutical Co. Ltd in 2011 and Kyowa Pharmaceutical Industry Co. Ltd in 2007.

Lupin earned about 10% or ₹ 1,365 crore of its total revenues of ₹ 13,701.6 crore in the year ended March from Japan, making it the largest Indian generic drug maker in that country.

Other Indian rivals of Lupin have struggled to crack the Japanese market, which stands second only to the US with a size of $110 billion. But unlike the US, which is fast to adopt generic drugs, consumers in Japan remain brand conscious, making it tough for Indian generic makers.

An ageing population and mounting health costs have prompted the Japanese government to set a target of reaching 80% generic penetration by the end of the decade, bringing the domestic market under the radar of Indian pharmaceutical companies.

Shares of Lupin declined 1.10% to ₹ 1,704.35 on BSE, while the benchmark Sensex lost 0.08% to 27,981.71 points.

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