BackAurobindo Pharma gets US FDA nod for generic heartburn drug
Aurobindo Pharma received approval from the US FDA to introduce its generic version of AstraZeneca's over-the-counter heartburn drug Nexium 24 Hours
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Mumbai: Aurobindo Pharma Ltd said it has received approval from the US Food and Drug Administration (FDA) to introduce its generic version of AstraZeneca Plc’s over-the-counter (OTC) heartburn drug Nexium 24 Hours. The approval is for the drug in a capsule form.
Aurobindo Pharma is the second company to get a generic approval for the product having a market size of $300 million. Analysts expect this approval to give impetus to the Hyderabad-based company’s plans to expand its portfolio of OTC drugs in the US but cautioned that gaining market share will take time.
OTC drugs are medicines that can be bought directly by patients without a prescription. Aurobindo has identified OTCs as one of its focus areas in its 2016-17 annual report. It plans to launch its Nexium generic in the US immediately, the firm said in an exchange filing.
“Assuming a price discount of 40%, market share of 40% and margin of 30%, we expect $38 million revenues (from Nexium generic) in 12 months," said Surajit Pal, an analyst at Prabhudas Lilladher. Aurobindo reported revenues of Rs15,089.86 crore, in the last fiscal.
During the June quarter, Aurobindo Pharma had launched another OTC product, a generic version of Reckitt Benickser’s Mucinex DM tablets, used to loosen mucus and phlegm. This product had a market size of $235 million.
“Aurobindo currently generates less than 2% of its US revenues from OTC products. We believe the launches of Mucinex DM and Nexium 24-hour generics could cumulatively add $35-45 million to the company’s revenue and also improve traction with customers and its ability to commercialize the rest of its OTC portfolio," according to a Citi Research report.
However, others cautioned that gaining market share in the OTC segment may take time.
“While the OTC products market is less crowded, it takes time for companies to ramp up, said Vishal Manchanda, analyst at Nirmal Bang Securities. “Aurobindo may take one year or even more to ramp up but once the market share is established, it will become a sustained revenue stream as price erosion in OTC drugs is not as steep as prescription medicines."
On Tuesday, shares of Aurobindo Pharma ended up 0.7% at Rs763.15 on the BSE, while benchmark Sensex index closed down 0.08% at 32,609.16 points.
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