Aurobindo to replace Actavis’ drugs with its own to lower costs

Aurobindo Pharma will replace about 600 products of Actavis with its own for cost optimisation.

Early this year, the Hyderabad-based ₹8,100 crore drug-maker had acquired the commercial operations of Actavis Plc in seven Western European countries for €30 million.

Aurobindo has already completed the front-end operational integration. “In the second phase, we will be switching the Actavis product with Aurobindo’s wherever possible,” Arvind Vasudeva, Chief Executive, Aurobindo, said in a recent earnings conference call. In the third phase of integration over the next 18 months, Aurobindo plans to move manufacturing of some of the products from Europe to its own units to reduce costs.

Out of 450 molecules, 200 are likely to be replaced while in terms of products forms, 600 out of 1,200 could be replaced over the next 24 months, depending on R&D and manufacturing capacity creation in Aurobindo. “This would reduce the cost and improve the margins,” Vasudeva added.

Though there is a little overlap between products being manufactured by both companies, a majority of them are separate products. Aurobindo has three businesses across the Actavis portfolio – hospital injectibles, branded generics and generics.

In the second quarter ended September 30, it recorded ₹766 crore sales in Europe, registering more than four-fold growth compared to ₹171 crore in the year-ago period. The growth was attributed to the acquisition of Actavis, which helped Aurobindo enhance its European presence.

The company has lined up around ₹600 crore for capital expenditure in the current fiscal. Next year, it would be equivalent or slightly more than this, according to N Govindarajan, Managing Director.

Aurobindo’s scrip gained 0.53 per cent on BSE on Thursday to ₹1,129.65.

COMMENT NOW