Lupin Pursues Large Specialty Deals with Debt and Risk Mitigation Strategies

Lupin Prepares to Ramp Up Acquisition Strategy with Stronger Balance Sheet

Lupin, a leading drugmaker, is gearing up to intensify its acquisition strategy, backed by a robust balance sheet and rising cash flows. The company aims to sharpen its focus on specialty therapies while avoiding high-risk bets that have hurt it in the past.

Lupin's executive director and global chief financial officer, Ramesh Swaminathan, has emphasized the company's commitment to more calibrated and disciplined aggression in its acquisition approach. The company is prioritizing targets in ophthalmology, pulmonology, and rare neurology, signaling a shift from broad-based generics-led expansion to a more selective, higher-margin growth strategy.

The company's improved financial position is at the center of its acquisition plans. Lupin ended FY26 with net cash of Rs 4,636 crore, supported by stronger profitability and tighter working capital. It is also generating around Rs 3,000 crore in annual cash flows, giving it room to fund acquisitions while preserving financial flexibility.

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Lupin has set clear limits on leverage, with a capital allocation policy that restricts debt to twice the EBITDA. With an EBITDA base of about Rs 8,000 crore, the company has significant acquisition firepower. It could potentially take on up to Rs 16,000 crore, Rs 17,000 crore, or Rs 18,000 crore of debt to fund acquisitions.

Lupin's Acquisition History

Lupin's experience with mergers and acquisitions has been mixed. Its $880-million acquisition of Gavis Pharmaceuticals, completed in 2016, remains its largest deal but did not play out as expected. Gavis was heavily exposed to controlled substances, particularly opioid pain medications, and the subsequent US crackdown on opioid prescribing sharply eroded the value of its core portfolio.

In contrast, Lupin's recent acquisitions have been more selective. The company acquired VISUfarma for Rs 2,000 crore, strengthening its ophthalmology presence in Europe. It also acquired Multicare Pharma, expanding its position in the Philippines, and bought UK-based Renascience Pharma for £12.3 million in 2025. Additionally, Lupin acquired respiratory brands Aarane and Nalcrom from Sanofi in 2024.

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These transactions were aimed at adding products, building capabilities in specialty segments, and expanding the company's geographic footprint. VISUfarma, in particular, gives Lupin access to European markets such as Italy and Spain while expanding its branded ophthalmology portfolio.

Growth Path

The M&A push comes after a strong operating run. Lupin delivered its 15th consecutive quarter of growth in FY26, with revenue rising 23 percent and EBITDA margins expanding to nearly 30 percent, helped by a better product mix, strong US performance, and cost efficiencies.

However, the company has guided for a more measured FY27, with high single-digit revenue growth and EBITDA margins of around 25 percent, as it factors in competitive pressure in key US products such as Mirabegron and Tolvaptan.

Investments in Innovation

To support growth beyond generics, Lupin is also increasing investments in innovation. R&D spend stood at 7.5 percent of sales in FY26 and is expected to rise to around 8 percent in FY27, with focus areas including complex generics, biosimilars, and specialty platforms.

The strategy mirrors a wider shift among Indian drugmakers, which are increasingly using acquisitions to move beyond commodity generics into specialty, branded, and innovation-led businesses. Sun Pharma's proposed $11.75-billion acquisition of Organon, announced in April 2026, is a notable example, aimed at expanding its global footprint and strengthening its presence in women's health, biosimilars, and established brands.