Lupin, Other U.S. Firms Consider Bid For GSK Generics

Inside sources reveal that Indian pharmaceutical generics firm Lupin, along with other U.S. pharma firms, is considering bidding for GlaxoSmithKline’s auctioned mature and generic drugs.

GSK seeks to divest its lineup of mature drugs in an effort to improve its growth profile by getting rid of its off-patent drugs in North America and Western Europe. The drugs are estimated to bring in annual sales of 1 billion pounds and are expected to fetch two to three times the price on the auction block.

The company opened bidding for its older drugs in May to private equity firms. GSK CEO Andrew Witty commented at the time, “You should not be surprised if we were able to transact a disposal of some of that established product portfolio in the next year or two. That is not part of our future.”

Last year, GSK started selling off some of its non-core products. It disposed of its thrombosis drugs Arixtra and Fraxiparine to South African firm Aspen Pharmacare for 700 million pounds. The company’s decision is a reflection of an industry wide trend that sees giant drugmakers divesting mature drugs to boost emerging and new drugs’ sales.

It’s a trend that appeals to specialty pharma companies as well as generic firms such as Lupin, which could use the transaction to trim down their U.S. tax bill by shifting to a non-U.S. tax address. The acquisition of the mature drugs could also help the companies to secure private equity funds. Generic pharma company Mylan announced earlier that it will purchase Abbott Laboratories’ non-U.S. business for $5.3 billion in a similar deal.

Lupin founder and Indian billionaire Desh Bandhu Gupta said that the company is looking for ways to bolster its European business through the acquisition of generic manufacturers. Gupta said Lupin will spend up to $1 billion to buy companies specializing in complex generics such as biosimilars and injectables. His daughter told Bloomberg in an interview that, though Lupin has an established presence in the U.S., its European presence could be expanded. The company will focus on building a presence in specialty as well as generics, she said.

A Mumbai analyst who refused to be named told Reuters, “For these billion-dollar companies like GSK, such fringe products add flab. On the other hand, a smallish Indian player can do very focused promotion ... and gain scale with increased penetration. This has been Lupin's strategy thus far with its U.S. branded business.”