Aurobindo Pharma eyes at least 40% rise in US injectables business in FY18
Mumbai: Drug maker Aurobindo Pharma Ltd expects its US injectables business to grow at least 40% this financial year thanks to new launches and higher sales from existing products—growth that is likely to help offset some of the pricing pressure in oral solid drugs.
“Our injectables business has ramped up well and it should grow in the range of 40-50% year-on-year (in FY18) is our confidence as of now. We have filed 90 injectable ANDAs in the US as on 30 September, of which 51 have been approved, including 2 tentative approvals, and 39 are under review,” N. Govindarajan, managing director of the company said in a conference call with analysts on Friday. ANDA is short for abbreviated new drug application.
The Hyderabad-based company’s injectables business has been growing significantly over the last two-three years. In fiscal year 2016-17, US injectable sales rose 67% to $157 million, while in 2015-16, sales were up 39% year-on-year at $95.2 million.
Brokerage firm Nirmal Bang Securities said in a report released Friday that injectables would be the near-term growth driver for Aurobindo Pharma.
“To achieve the guidance of $220 million (revenue from injectables), the company needs to attain a run-rate of $65 million per quarter in the rest of FY18. Ramp up in injectable sales would be driven by volume gains in pantoprazole injection and tazobactam/piperacillin injection which are under shortage, and new launches which include Ertapenem, Fondaparinux and Vancomycin,” the Nirmal Bang report said.
In the quarter ended September, the company’s US injectables business recorded sales of $46 million, up 21% from the same period a year ago. Injectables contributed 14% to the total US sales of $327 million.
Meanwhile, Aurobindo Pharma’s oral solid drugs business saw a higher price erosion of 10-12% in the September quarter against 9-11% in the June quarter. Still, the company expects growth in the US, its biggest market, to continue.
“Even though there is pricing pressure, we will grow in the US because we believe there are enough opportunities to grow volumes in existing business and also new products will be launched,” Govindarajan said.
The company expects about seven to nine product approvals in the US each in the remaining two quarters of this year.
In 2016-17, US sales totalled Rs6,827.2 crore, up 12.3% from the previous year. The overall consolidated revenue stood at Rs15,087.5 crore.
Aurobindo Pharma’s operating performance is seen improving on the back of execution of its injectable pipeline in the US, new launches that will offset base business pressure and better profitability in Europe, brokerage firm J.P. Morgan said in a report on Friday.
“We expect US growth momentum to improve from current levels, aided by its strong pipeline and faster ANDA approvals given no pending regulatory issues in its facilities. We believe earnings visibility in a tough generic environment, free cash flow generation and debt reduction over time should help re-rate the stock from current levels,” it said.
On Friday, shares of the company closed down 6.2% at Rs740.25 on the BSE, while benchmark Sensex index ended up 0.2% at 33,314.56 points.
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