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Yes Securities Report
Lupin Ltd. alluded to multiple factors in U.S. – shelf stock adjustment, paring of inventory that gets pushed on to trade channels due to previous overstocking and 10% price erosion which led to a sharp 34% QoQ fall in U.S. revenues.
Management indicated it is aggressively working on cutting costs – to the extent of Rs 5 billion over next four-five quarters – in order to shore up margin.
Lupin remains cognizant of cost base build up and looks to prune 15% manpower from sites where U.S. supplies are unlikely to inch up materially. Research and development spending would also be curtailed in order to support margin.
In summary, even a modest rebound in U.S. coupled with easing of pricing pressure would lead to disproportionate benefit on margin on their journey towards double digit range.
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