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Informist, Monday, Nov. 11, 2024

 

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--Aurobindo Pharma: Expect Oct-Mar financials to be better than in Apr-Sept 
--CONTEXT: Aurobindo Pharma mgmt's comments in post-earnings analyst concall 
--Aurobindo Pharma: Working to achieve 21-22?ITDA margin for FY25 
--Aurobindo Pharma: US total sales for Jul-Sept $421 mln, up 2.9% YoY 
--Aurobindo Pharma: Breakeven for Kakinada Penicillin-G unit seen Jan-Mar 
--Aurobindo Pharma: US pricing expected to be neutral Oct-Mar 
--Aurobindo Pharma: Pdt launches, volume gains to drive US growth Oct-Mar 
--Aurobindo Pharma: R&D spend spike in Jul-Sept on biosimilar clinical trials 
--Aurobindo Pharma: See R&D costs close to Jul-Sept level for some more qtrs 
--Aurobindo Pharma: Spike in other expenses due to Red Sea logistics issues 
--Aurobindo Pharma: See clarity on US healthcare policy under Trump in 3 mos 
--Aurobindo Pharma: Building new facility to cater to demand for GLP-1 pdts 
--Aurobindo Pharma: Have 14 products under development in GLP-1 segment 
--Aurobindo Pharma: New GLP-1 facility expected to be ready by Dec 2025 
 

 

By Narayana Krishna and Akshay V Jhonson

 

HYDERABAD/MUMBAI - After missing the Street's estimates for Jul-Sept earnings, Aurobindo Pharma Ltd on Monday said it expects to fare better in the second half of the current financial year, led by new product launches, volume gains and a stable pricing environment. In a post-earnings conference call, the management said the company faced supply chain challenges in the September quarter due to disruptions in the Red Sea, which also spiked its logistics expenditure.

 

"We are on track to achieve our internal target of 21-22% (EBITDA margin) for the full year, which means effectively, the second half (Oct-Mar) should be better compared to the first half (Apr-Sept)," Chief Financial Officer Santhanam Subramanian said in the call. "This outlook reflects our confidence in the business and our ability to deliver strong performance in the coming quarters."

 

On Saturday, Aurobindo Pharma reported a consolidated net profit of INR 8.17 billion for Jul-Sept, up 7.95% on year, while its revenue rose 7.99% on year to INR 77.96 billion. Though the company reported year-on-year growth for the quarter, the net profit was below the Street's estimates, while revenue was largely in line with expectations.

 

Aurobindo Pharma said it expects its earnings before interest, tax, depreciation and amortisation or EBITDA margin for FY25 in the range of 21-22%. For Jul-Sept, it reported an EBITDA margin of 25.1%.

 

Besides supply chain issues, regulatory challenges at its injectable arm Eugia Pharma Specialties Ltd also had an impact on the overall US performance during the quarter, the company said.  

 

Aurobindo Pharma reported a 2.9% on-year rise in its overall US sales in Jul-Sept at $421 mln, which the company said was in line with expectations. While the US pricing scenario for the last quarter was benign, it will be neutral for the next six months (Oct-Mar), the company said.

 

GLP-1 STRATEGY

Aurobindo Pharma's management said the company has a strategy in place for upcoming opportunities in glucagon-like peptide-1 or GLP-1. The company filed 14 new abbreviated drug applications (ANDA) in peptides, as part of its GLP-1 strategy. It is building a new facility to cater to the expected demand for this category of products in the coming years, and this is expected to be ready by December 2025. It is also gearing up to provide both active pharmaceutical ingredients and formulations of the GLP-1 category.

 

Several GLP-1 products, mainly targeting diabetes and weight-loss therapies, are expected to become patent-free, and pharmacuetical companies worldwide are gearing up to capture market share with their set of products.

 

Aurobindo pharma said it is focused on oncology and diabetic segments based on the peptide-based development. The company's newly commissioned Penicillin-G plant in Kakinada, Andhra Pradesh, is expected to achieve breakeven in Jan-Mar.

 

R&D SPENDING

Aurobindo Pharma expects its research and development spending to be remain at levels seen in Jul-Sept, as ongoing clinical trials in the biosimilars segment are likely to need higher spending. For the September quarter, Aurobindo Pharma reported its research and development spending at INR 4.10 billion, 5.3% of the revenue. The spike during the quarter was due to higher spending on clinical trials of four new biosimilar products.

 

Responding to a question on how the US healthcare industry would evolve once the Donald Trump administration takes charge, Aurobindo Pharma said it takes at least three months to get clarity on the healthcare policy side, though primary indications are showing positive signals.

 

At 1104 IST, shares of Aurobindo Pharma were at INR 1,310.45 on the National Stock Exchange, down 1.3% from the previous close.  End

 

US$1 = INR 84.38

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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