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Lupin Ltd., India's fourth-largest drugmaker by sales, has agreed to buy U.S. peer GAVIS Pharmaceuticals LLC for $880 million to increase its presence in the United States, where slow sales growth has hit the group's profits.
Lupin said sales in the U.S., its biggest market, fell 31 percent to $180 million in April-June. The drugmaker's U.S. growth has been hampered by a slower pace of winning generic drug approvals since the U.S. Food and Drug Administration overhauled its generics review process.
That sluggishness affected the group's net profit, which dropped 15 percent in the June quarter, the company said today in a filing with the Bombay Stock Exchange. Net profit stood at Rs 525 crore, compared with Rs 624.7 crore a year ago. Lupin's sales grew in India, but that was not enough to make up for lost business in the U.S. The stock plunged 5.2 percent after the announcement, compared with a 0.5 percent fall in the Nifty.
Lupin said buying privately held GAVIS would give it access to 66 generic drugs for which the New Jersey firm has sought approval, representing a potential market value of $9 billion.
Lupin would also gain dermatology drugs, controlled substance products and other speciality generics.
The Indian drugmaker said it expects GAVIS to contribute to earnings in the first full year after purchase. Last year, GAVIS' sales reached $96 million.
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