LUPIN - Lupin Ltd Share Price

In the Q1 FY26 earnings call for Lupin Limited, management provided a positive outlook marked by continued double-digit growth in both revenues and profitability. They reported a 330 basis point year-over-year improvement in EBITDA margins, projecting a full-year EBITDA margin of 24% to 25%. Revenue for Q1 FY26 stood at INR 6,164 crores, reflecting an 11.8% growth, with the U.S. business achieving sales of USD 282 million, a notable 22.3% increase.

Key points highlighted by management include:

1. Growth in U.S. Business: The successful launch of Tolvaptan, with sole first-to-file (FTF) exclusivity, marked the highest U.S. revenues since Q4 FY2017. Management is optimistic about sustaining mid- to long-term growth in the U.S. market, targeting a brand sales pipeline worth USD 150 billion.

2. India Market Performance: India recorded a 7.8% growth in revenue, with the Formulations segment growing by 8.6%. Chronic therapy areas like Cardiac and VMS are performing well, and management plans over 80 product launches in the next five years.

3. Research and Development Spending: R&D expenses have increased to 7.9% of sales, with a focus on complex and specialty products, including a robust pipeline with over 60 product filings planned for the U.S. market. R&D spend is expected to be between 7.5% to 8.5% for FY26.

4. Long-Term Strategy: Lupin is committed to building a leading global specialty business, leveraging both in-house innovation and strategic acquisitions. Management mentioned key upcoming product launches, including Generic Victoza® in October and expectations for Risperdal Consta® approval in September.

5. Biosimilars Growth: Management expressed optimism around biosimilar approvals, including Pegfilgrastim and Ranibizumab, anticipating market entries in FY27 and FY28.

Overall, Lupin's management is confident in their ability to continue strong growth, enhance profitability, and navigate market challenges effectively.

Question and Answers from the Earnings Call

Question: "What is the top-line growth outlook for the year, especially for the U.S., and was the contribution from Tolvaptan in Q1 FY26 a partial or full quarter contribution?"
Answer: "For the year, we expect strong double-digit growth for both the company and the U.S. We launched Tolvaptan in late May, so its contribution for Q1 FY26 was partial. Being a specialty product, we did not anticipate significant channel stocking ahead of the launch."

Question: "What impacted the India business growth compared to the formulations segment?"
Answer: "The primary factor was the tender and institutional business, which can be lumpy. We're in a solid position regarding Global Institutional Business, but it affected our overall growth this quarter."

Question: "Given potential sales cliffs in FY27, which products might mitigate declines for the U.S. market?"
Answer: "The future is influenced by many factors, including the outcomes of litigation and the launch of our injectable pipeline with approvals like Glucagon and Liraglutide. We anticipate a high single-digit growth for the next fiscal year driven by these key products."

Question: "How are you assessing the impact of potential tariffs on generic pharmaceuticals?"
Answer: "It's challenging to predict outcomes, but we anticipate managing around a 10-15% tariff through price increases and tech transfers into the U.S., especially for high-value products, to mitigate the impact."

Question: "What is the expected timeline and market opportunity for NaMuscla®?"
Answer: "We are currently in Phase 3 recruitment and anticipate launching NaMuscla® in the U.S. in FY29, with a market opportunity estimated between $100 million to $200 million."

Question: "Can you provide an update on Glucagon and its market potential?"
Answer: "Glucagon was launched recently, and we are targeting the entire market, assessing how much share we can capture. The potential remains favorable given limited competitors."

Question: "Will you continue to face margin pressures from your adjacency businesses?"
Answer: "Yes, initiatives in diagnostics, digital health, and API CDMO are investments currently impacting margins. However, we expect these to reach breakeven over time, particularly our diagnostics business next year."

Question: "What is the state of your injectable product pipeline, including Liraglutide?"
Answer: "We launched Glucagon and plan to launch Liraglutide by October. This injectables expansion is crucial, as we see long-term potential in the market despite competition."

Question: "Is there a timeline update for the approval of Risperdal Consta®?"
Answer: "We faced several information requests from the FDA that pushed our goal date to September, but we are optimistic about staying on track for that timeline."