<div><em>The enabling approval of the shareholders to the fund raising plan shall be sought at the company's AGM on 24 June, says <strong>C H Unnikrishnan</strong></em><br><br><br>Drug maker Lupin Ltd, which has been targeting an ambitious growth both in the domestic and international markets, especially in European region where it still does not have a strong footprint, is planning to raise a substantial amount through debt or equity options for a possible a strategic acquisition.</div><div> </div><div>Lupin's board at its latest meeting held on June 22 has approved an enabling provision to raise funds up to Rs 7500 crore through issue of securities including equity shares, global depository receipts, bonds or any other equity linked instruments, the company informed stock exchanges on Wednesday.</div><div> </div><div>The enabling approval of the shareholders to the fund raising plan shall be sought at the company's annual general meeting scheduled for Wednesday. </div><div> </div><div>Although Lupin witnessed strong sales and profit expansion in the range of 10-29 per cent over the past 3 years, sector analysts had expressed concerns about the scalability of its existing brand portfolio and the need of inorganic growth.</div><div> </div><div>"Despite a sharp operational movement, we believe there are ample levers for the company to sustain current margin levels. However, we remain sceptical on the current branded portfolio which has limited scalability, making inorganic growth imperative," said an analyst report by brokerage Reliance Securities in May. </div><div> </div><div> The analyst report said that, "though convinced on its (Lupin's) execution ability, we remain concerned on the valuation stretch. Slower new drug approvals and uncertainty over its branded drugs strategy also act as overhang." </div><div> </div><div>Meanwhile, the European drug regulator had suspended certain products of Lupin along with a few other Indian drug makers in that market recently due to doubtful tests. </div><div> </div><div>In response to queries from stock exchanges, the company had earlier clarified that, "We wish to state that in connection with GVK Bio Eqivalence studies, the company along with many other companies in the EU, received communication from European Medicines Agency (EMA) for suspension of Trimetazidine and Cefpodoxime tablets in January 2015."</div><div> </div><div>Hyderabad-based GVK Bio, a clinical research organisation, contracted by drug makers including Lupin for bio-equivalence studies of their products, had faced penal action by the European regulator for alleged errors in the trial practices, last year. </div><div> </div><div>Following this, Lupin had also informed the European regulator that it will submit new bio-equivalence studies (the study that determines the quality and efficacy of a generic drug compared to the originally approved branded formulation) for these products to EMA by June. It had submitted a similar report to the European regulator for review in May and the feedback was awaited. </div><div> </div><div>Lupin's new fund raising plan is mostly aimed at a strategic acquisition in the European market, said another sector analyst, who doesn't want to be identified. </div>
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