According to reports from Business Standard, Aurobindo Pharma delivered robust 16.3% growth in the June quarter, aided by strong performance across key markets. The European business demonstrated exceptional growth of 25.6% year-on-year, driven by robust performance across all key markets. The US business, which accounts for 41% of sales, grew 8.1% year-on-year on the back of volume gains and new product launches. Growth markets also showed significant momentum, rising 37.7% year-on-year.
As reported by Business Standard, the successful integration of Lannett Company (acquired a year ago) during the quarter strengthened the company's position in complex generics, controlled substances and government business. The acquisition helped launch the company's first product in the respiratory (inhalation) segment at the end of August, the generic equivalent of asthma and chronic obstructive pulmonary disease treatment formulation Advair. This product can help tap into a market of upwards of $650 million. In September, the company received final approval to manufacture and market the generic equivalent of the QVAR inhaler, used in treating asthma, which has a market size of about $300 million.
According to Business Standard, analysts led by Amey Chalke of JM Financial Research believe that respiratory and contract development and manufacturing organisation (CDMO) would be the next leg of growth. The brokerage has a buy rating with a target price of ₹1,975. The company is planning to increase formulation CDMO revenue from $20 million annually to $200-300 million by 2030-31, while API CDMO currently generates $10 million annually and could scale up to $50 million in three years. Peptide CDMO could contribute $50-100 million if development progresses as planned.
As reported by Business Standard, operational performance was robust with gross margin expanding by 153 basis points year-on-year to 60.4%, aided by favourable business mix and ongoing operational efficiencies. Operating profit saw 20% growth year-on-year, with a margin of 21%, up 60 basis points year-on-year. The US FDA's routine inspection at Lannett Company towards the end of August led to four observations, which the company noted are procedural in nature and a constructive development as it continues to strengthen the facility.
According to Business Standard, the company's US market growth in the quarter was aided by the launch of ten products and received ten final abbreviated new drug application (ANDA) approvals and filed nine ANDAs in the quarter. Its cumulative pipeline remains strong with the company having filed 896 ANDAs and received 737 final approvals and 33 tentative approvals. Axis Securities points out that Aurobindo Pharma's future outlook remains strong, supported by upcoming product launches and strategic initiatives, though it has revised its recommendation from buy to hold given its above-average valuation, with a target price of ₹1,600.
