AUROBINDO PHARMA

Flying high in US pharma market

Hyderabad-based Aurobindo Pharma is a leading Indian pharmaceutical company which earns almost 90 per cent of its revenues from abroad, with the US leading the list of overseas buyers and contributing almost half of the company’s revenues. The three and a half decade-old company is engaged in the manufacture of generic formulations and active pharmaceutical ingredients (APIs). It holds a strong position in the US market, where it is the fifth largest generic pharma company. The prospects for the company are highly healthy, going ahead.

Consider:

• The company can be called an Indian multinational pharma company going by its global sales. It has 26 manufacturing facilities for its API and formulations businesses, which have requisite approvals from various regulatory authorities including the US FDA, the UK MHRA, Japan’s PMDA, WHO, Health Canada, MCC South Africa and ANVISA Brazil. The company has also entered Poland and the Czech Republic with the acquisition of Apotex’s commercial operations. It has also strengthened its US presence with the acquisition of the dermatology and oral solid business from Sandoz. Today, the US accounts for half the revenues of the company and other overseas countries for around 40 per cent. The company has strengthened its presence in many European countries, including France and Italy, where it ranks among the largest generic companies.
• Aurobindo has one of the best product approval rates and launch pipelines in the US. Despite pricing pressures, it is one of the few companies able to mitigate this risk due to continuous product launches and approvals. A sturdy product pipeline and expected traction from recently launched products ensures a strong growth outlook for the US business, driven by improving traction from the generic injectables space. The European business too is on the path to recover with demand normalising and showing signs of improvement.
• With a view to meeting the rising demand for its products, the company is expanding its capacities by setting up a greenfield facility at Vizag aimed at Europe and emerging markets, and is also setting up a facility in the US aimed at US markets. The expanded capacities are expected to be ready within a year or so and provide ample visibility of the growth ahead. Going ahead, the company is looking to build a presence in the speciality segment which includes segments of biosimilars, oncology inhalers and transdermal patches, among others, which is likely to support growth. Further, the company’s capacity of 450 million doses would be ready within the next 3 to 5 months and is likely to be operational by the end of July 2021.
• Aurobindo plans to launch around 60 products in the US in the current year and expects to sustain the launch momentum into the next year as well. The new launches would include injectables which are a key growth driver. The company has 70 assets under development, 50 assets under review and 80 approved products, thus pointing towards a sturdy product pipeline which would unfold going ahead. Successful clearance from the USFDA for its plants is awaited as the company has submitted its responses.
• In its programme to launch new products, the company’s focus on injectables to drive growth augurs well. It has a strong product portfolio in the injectables space, which comprises 80
• approved products, pointing to a sturdy product pipeline. In addition to this, the company is also setting up a new facility aimed at the US markets, with a focus on high-value and low-volume products. The new facility will also enable the company to diversify its risk related to unit 4 as it is the only plant catering to the US markets as of now. The new facility will also enable the company to benefit from local tenders, if any. Collectively, the company is targeting revenues of around $650-700 million over the next three years from injectables, from around $380 million as of now.
• Apart from injectables, the complex generics space is fast gaining traction, that too at a time when the complex generics market is slated to be around $20 billion over the next 3 years from $16 billion at present. Currently, the company has a small presence in complex generics but it looking to enhance its presence gradually in the segment going ahead. Collectively, a strong overall new product pipeline, focus on the injectables, business and a gradual improvement in the complex generics space would be over the next 3 to 4 years. For the US business overall, sales are expected to clock a double digit – 13 per cent – CAGR over fiscal years 2021-2023. Overall the company expects to incur a capex of $200- 220 million during the next two years.

The company has been growing at a fast pace. During the last five years, its sales have expanded from Rs. 9323 crore in the fiscal 2016 to Rs. 32266 crore in the fiscal 2020 with the net profit during this period rising from Rs. 1620 crore to Rs. 1873 crore. During the next year we expect an EPS of Rs. 35 per share of the face value of Re. 1.

PERFORMANCE INDICATORS (Rs. in crore)