Ramesh Swaminathan, ED, Global CFO, Head of IT and API SBU Plus
Lupin is preparing to step up its acquisition strategy, backed by a stronger balance sheet and rising cash flows, as the drugmaker looks to sharpen its focus on specialty therapies while avoiding high-risk bets that have hurt it in the past.
"We still don't shy away from large acquisitions, but we are a lot more calibrated in our aggression, looking at protecting the downsides. We don't bet the company anywhere," Lupin's Executive Director and Global Chief Financial Officer Ramesh Swaminathan told Moneycontrol in a recent interview.
The company is prioritising targets in ophthalmology, pulmonology and rare neurology, signalling a shift from broad-based generics-led expansion to a more selective, higher-margin growth strategy.
At the centre of it is Lupin's improved financial position. The company 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.
Lupin has also set clear limits on leverage. "The capital allocation policy sets in the discipline that is required for this. So, it says we would not have a debt in excess of twice the EBITDA," Swaminathan said.
With an EBITDA base of about Rs 8,000 crore, it gives the company significant acquisition firepower. "We could potentially go up to about Rs 16,000 crore, Rs 17,000 crore, Rs 18,000 crore of debt… to fund acquisitions," he added.
Mergers and acquisitions are not new to Lupin but the company's experience 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.
The recent approach has been more selective. Lupin's Rs 2,000-crore acquisition of VISUfarma strengthened its ophthalmology presence in Europe. The acquisition of Multicare Pharma helped consolidate its position in the Philippines. It also bought UK-based Renascience Pharma for £12.3 million in 2025 and acquired respiratory brands Aarane and Nalcrom from Sanofi in 2024.
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. It also provides a platform to cross-sell complex generics, biosimilars and specialty products.
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.
The company, however, 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. "We'll be looking at high-single digit number in terms of overall sales growth… and about 25 percent margins," Swaminathan said.
The US business, which contributes more than $1 billion in annual revenue, is expected to remain stable but could see high single-digit to low double-digit erosion, partly offset by new product launches and volume growth in the base portfolio.
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.
Excerpts based on virtual interaction with Moneycontrol on June 1, 2026.
