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Aurobindo Pharma to diversify product portfolio to propel future growth

During 2019-21, Aurobindo Pharma plans to ramp up filing of specialty drugs and differentiated products, launch the first set of cancer, respiratory and topical products and complex injectables in the US and launch biosimilars and vaccines in the emerging markets. Photo: BloombergPremium
During 2019-21, Aurobindo Pharma plans to ramp up filing of specialty drugs and differentiated products, launch the first set of cancer, respiratory and topical products and complex injectables in the US and launch biosimilars and vaccines in the emerging markets. Photo: Bloomberg

Aurobindo Pharma is strengthening its product pipeline and plans to have a diversified portfolio which will drive growth in the coming years

Mumbai: Aurobindo Pharma Ltd is strengthening its product pipeline and plans to have a diversified portfolio, including cancer drugs, complex injectables, respiratory products, peptides, topicals and transdermals, and biosimilars, which will drive growth in the coming years.

The Hyderabad-based company outlined its plans for the next few years in a presentation at JP Morgan Healthcare conference in San Francisco, US. According to the presentation, the drug maker will focus on strengthening its product portfolio, research and development (R&D) and manufacturing capabilities and supply chain and marketing structure in 2018.

During 2019-21, Aurobindo Pharma plans to ramp up filing of specialty drugs and differentiated products, launch the first set of cancer, respiratory and topical products and complex injectables in the US and launch biosimilars and vaccines in the emerging markets.

The company expects the launch of inhalers, transdermals, biosimilars, and branded prescription and over-the-counter (OTC) products in advanced markets beyond 2022.

Over the years, the company has enhanced its R&D capabilities and currently has five R&D centres in Hyderabad and two in the US. In fiscal year 2016-17, it spent $81 million on R&D, which is 4.3% of total sales. In the first half of the current financial year, R&D spend was at $50 million.

In fiscal year 2016-17, Aurobindo Pharma clocked a revenue of $2.25 billion. The US accounted for 45% of sales, followed by European Union, which contributed 22% to sales.

Analysts expect the company to maintain growth momentum despite price erosion in the US because of its diversified portfolio, increasing contribution from injectables, and penetration in Europe.

Brokerage firm IDFC Securities said in a report on 2 January that Aurobindo Pharma’s US sales are estimated to grow at a compounded annual growth rate (CAGR) of 13% over FY17 to FY20 driven by 33% CAGR in injectables, new niche oral solid drug launches and scale-up in dietary supplements and OTC segments.

“Recent first-to-market launch of generic Renvela and generic Fondaparinux approval adds to our comfort on Aurobindo’s ability to move up the value/complexity curve—critical for sustaining momentum on a much enlarged base," IDFC Securities said.

A diversified portfolio with limited product concentration risk is expected to help the company deal with price erosion challenges in the US.

“We maintain Aurobindo as our top pick, given its large, diversified and improving product basket/portfolio, limited concentration and clean compliance slate. We also see other businesses (EU market, antiretroviral drugs) scaling up on revenues and margins over the next few years, which would gradually reduce dependence on the US and augur well for longer-term growth," Citigroup Global Markets India Pvt. Ltd said in a November report.

At 11:33am, shares of Aurobindo Pharma were up 0.07% at Rs678.40 on the BSE, while benchmark Sensex index was up 0.24% at 34,435.83 points.

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