On Tuesday, Lupin shares rose around 2% to hit a 52-week high of Rs 889.90 after it was considering a demerger of its dynamic pharmaceutical ingredients (API) business.

Lupin’s rival Glenmark Pharma undertook a similar reform exercise and hived off its API business into a new firm, Glenmark Life Sciences.
At 10:08 am, Lupin shares were trading at Rs 885.95 on the NSE, up 1.3% from the previous close.

In recent quarters, the API segment observed robust pressure on margins mainly amid raised raw material costs, covid-led de-stocking, China supply chain troubles and the US price erosion. A raw material price decline and normalising of price erosion set the segment on the retrieval path in the January-March quarter.

Ramesh Swaminathan, the executive director and worldwide chief financial officer, said API business sales grew 14.6% on a QoQ basis.
“The sales of core Cephalosporin API sustained their recovery route, driven by advanced sales of Cefaclor and 7-ACCA. On a YoY basis, the sales growth was an impressive 46.4%.”

Cephalosporins are a huge group of antibiotics closely related to penicillin and are used in handling a wide range of infections. Cefaclor is a cephalosporin used in giving respiratory and skin infections.
According to Lupin’s 2022 annual report, its API arm contributed 6% of the total revenue, with sales of Rs 990 crore.