Aurobindo Pharma has completed the acquisition of Lannett Company, Inc., USA. The deal was closed at an enterprise value of around $250 million and adds nearly $300 million to annual revenue.
Lannett brings a turnaround opportunity, given that it has faced pricing pressure in the US generics market, product-related challenges and operational issues that have weighed on revenue growth and profitability. Its revenue fell from $314 million in CY23 to $286 million in CY24. This recovered to $306 million in FY25 with an Ebitda margin of about 15%, which means Aurobindo acquired Lannett below 1x sales and roughly 5.5 times Ebitda. Valuations weren’t demanding.
Lannett’s US manufacturing facility has an annual capacity of about 3.6 billion doses, but operates at only 40% utilization. It has a portfolio of products in controlled substances and ADHD therapies, segments that generally have higher entry barriers and lower competition than traditional generic products.
The management expects several operational synergies. It expects to benefit from Lannett’s distribution network, product pipeline and access to government business through a stronger US manufacturing presence.
But the acquisition could dilute near-term margins slightly since Aurobindo’s consolidated FY26 Ebitda margin was relatively higher at 20%. Aurobindo’s US revenue stood at $1.63 billion in FY26 and the management aims to reach $2 billion over the next few years. Lannett provides an immediate boost to this goal.
Execution remains crucial. If Aurobindo succeeds in improving utilization levels, streamlining operations and leveraging its scale, Lannett’s margin could improve.
Aurobindo’s shares have gained 30% so far in 2026. Investors hope the company is entering a monetization phase after years of investments. “Aurobindo, over the past five years, has invested ₹11,800 crore in its business, while it has undertaken a total capex of about ₹15,500 crore,” said Nuvama Research’s 22 June report. The company has invested across businesses such as Pen-G, injectables, biosimilars, biologics manufacturing and the Lannett acquisition.
These investments set the stage for future growth. HDFC Securities estimates Aurobindo to clock consolidated net sales of ₹45,000 crore ( ₹33,700 crore in FY26) and an Ebitda margin of 21% by FY28. Growth would be aided by the Pen-G project ramp-up, Lannett’s integration, new US product launches, expansion in Europe and contribution from higher-margin businesses such as biosimilars and biologics manufacturing. The Aurobindo stock trades at 17 times its FY28 estimated earnings, as per Bloomberg.