Why Lupin Share Price is Falling

Pharma stocks were selling like hot cakes on the Indian stock market recently due to a few important factors. As a defensive sector, pharma is less affected by economic slowdowns. This makes it attractive to investors during uncertain economic times.

Pharma companies also saw strong sales growth, particularly in the US generics market. Demand for healthcare pushed sales of branded products higher. New product launches helped companies gain more market share and improve performance.

Additionally, strong quarterly earnings further boosted investor confidence. Lupin was one of the stocks participating in this rally.

Lupin is a major player in the pharma industry, known for producing a wide range of generics and branded medicines. The company's key focus areas include paediatrics, cardiovascular, anti-infectives, diabetology, asthma and anti-tuberculosis.

Over the past six months, Lupin's share price rallied by 37%.

However, this upward trend came to a halt this week on Thursday when its share price slipped 6%. Let's explore what's dragging Lupin's share price down.

The US Medicare Drug List

Lupin's share price dropped following a report. The US Centers for Medicare & Medicaid Services (CMS) released a preliminary list of 101 generic drugs on Wednesday this week, 9 October 2024.

These medicines will now be available for no more than US$ 2 for a month's supply to those enrolled in Medicare. Some common medications on this list include treatments for asthma, diabetes, high blood pressure, and high cholesterol.

The report noted that the generic drugs listed will not be subject to prior authorisation or quantity limits. Medicare, which serves millions (m) of Americans aged 65 and older, spends billions (bn) annually on drugs for over 67 m enrollees.

This move is part of broader efforts to lower drug costs under the Biden Administration's Inflation Reduction Act, which has also set new price caps for certain high-cost drugs.

The release of this list, however, has raised concerns among investors. Lupin's share price, along with Cipla's, fell due to the inclusion of the Albuterol inhaler on the list, which would now cost patients US$ 2 or less.

Investors seem worried that this price cap might hurt future revenues. This concern has dulled the positive sentiment around the stock, though industry experts believe the decline may be temporary and the companies will recover.

What Next?

Looking ahead, Lupin has outlined a strong strategy to drive future growth. The company plans to expand its presence in the US market by launching new products, such as PredForte and Liposomal Doxorubicin.

These additions are expected to push Lupin's US business to grow in high single digits in the current financial year. The company's focus on complex generics and increasing productivity is also set to improve margins further in the US market.

In India, the company's strategy involves launching around 20 new products in FY25. The company aims to outpace market growth by 20% to 30%, supported by its robust portfolio and a large sales force of over 10,000 representatives.

Its focus areas in India include cardiac, respiratory, and diabetes treatments, which are expected to continue performing strongly.

Additionally, Lupin is making strides in other developed markets like Canada, the UK, Germany, and Australia, with double-digit growth reported. The company has also seen progress in emerging markets, such as Mexico and South Africa.

With increasing R&D expenditure in the coming quarters, Lupin aims to strengthen its pipeline of complex generics, which should contribute to long-term growth.

How Lupin Share Price has Performed Recently

In the past five days, Lupin share price is up 0.6%. In the last month, it has slipped 0.7%.

The stock price has surged 67.2% in the 2024. Additionally, it has rallied 89.2% in the last year.

The stock touched its 52-week high of Rs 2,312 on 5 September 2024 and a 52-week low of Rs 1,113 on 31 October 2023.

About Lupin

Lupin is a leading pharmaceutical company from India and is among the top 10 generic companies in the world.

It started its business in 1968 and over the years has become one of the largest pharmaceutical companies in India and the world. Its businesses include formulations, APIs, drug delivery systems, and biotechnology.

Lupin was founded in 1968 by Desh Bandhu Gupta, who was a professor of chemistry at BITS-Pilani, Rajasthan.

Lupin's businesses encompass the entire pharmaceutical value chain, ranging from branded and generic formulations, APIs, advanced drug delivery systems to biotechnology.

The company's drugs reach 70 countries with a footprint that covers advanced markets such as USA, Europe, Japan, Australia as well as emerging markets including India, the Philippines and South Africa to name a few.

Lupin's research program covers the entire pharma product chain. The company's R&D program is headquartered in the Lupin Research Park located near Pune and Aurangabad that houses over 1,400 scientists.

To know more, you can check out Lupin's factsheet and quarterly results.

For a sector overview, read our pharmaceuticals sector report.

You can also compare Lupin with its peers:

Lupin vs Cipla

Lupin vs Sun Pharma

Lupin vs Zydus Lifesciences

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing!

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