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A ‘Border Tax’ Will Be Extremely Disruptive For Indian Drug Manufacturing Companies: Lupin

Brazil, Mexico are attractive markets for Lupin despite forex volatility, said Managing Director Nilesh Gupta

Employees walk past the Lupin Ltd. pharmaceutical plant in Goa, India. (Photographer: Dhiraj Singh/Bloomberg)
Employees walk past the Lupin Ltd. pharmaceutical plant in Goa, India. (Photographer: Dhiraj Singh/Bloomberg)

A potential ‘border tax’ will be extremely disruptive for Indian drug manufacturing companies, said Nilesh Gupta, Managing Director of Lupin on the sidelines of the Indian Pharmaceutical Forum 2017. Any such tax would impact supply chains and lead to higher costs for Indian drug companies, said Gupta whose firm is the second largest supplier of generic drugs to the US.

A ‘Border Adjustment Tax’ or tax on imports has been proposed by the Donald Trump led administration to encourage local manufacturing in the U.S.

According to Gupta, the international generics market remains extremely attractive for Indian firms. The U.S. market contributed 49.4 percent of Lupin’s sales for the October to December quarter. However, the company has been facing price erosion across its U.S. portfolio in high single digits. New product launches will become a lot more important in a scenario where companies are facing pricing challenges, said Gupta. Lupin plans to launch 25 products in the U.S. in FY18, the management said in a post-earnings conference call with analysts.

Apart from the U.S., emerging markets like Brazil and Mexico remain attractive for Lupin despite volatility in the currencies of these economies, said Gupta. While the contribution from Latin America stood at a minuscule 2.7 percent in the December-ended quarter, sales from this geography jumped 32.8 percent on a year-on-year basis.

Lupin also continues to look out for inorganic growth opportunities and is scouting for specialty business assets in the U.S.