Aurobindo sees dip in out-license partner sales

M. Somasekhar
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US sales flat in Q1; to focus more on own brands

Aurobindo Pharma Ltd is seeing a decline in out-license partner sales, especially in the US. In the just ended first quarter of fiscal 2012-13, it stood at around $50 million, slightly lower that the previous quarter.

The Hyderabad-based pharma major has major out licensed deals with multinationals, with a large partnership going with Pfizer. On the positive side, Aurolife, the company’s US manufacturing set up has turned around and Aurobindo, US, has done well on sales.

Giving this information to investors, the company officials said overall the sales in US was flat during the first quarter at Rs 328 crore.

Explaining the US market dynamics, N. Govindarajan, Managing Director said, “I see a quarter-to-quarter fluctuations in the sales from the out licensed partners. Therefore, we would focus more on growing our own brands and improve sale (which stand at around 60-65 per cent now)”.

The Rs 4,281-crore turnover company will push for more Aurobindo label products in the US market, starting with Montelukast chewable tablets and regular tablets launched early August. Aurolife has also lined up a couple of products. “We expect double-digit growth this fiscal for our label business,” he said.

US regulator inspections

Aurobindo Pharma is expecting that the USFDA (United States Food & Drug Administration) inspection of its manufacturing unit 4 & 6 would be completed by year-end. Govindarajan said the US regulator had completed inspection of unit 3 in March. “We have started getting approvals for new products. Quetiapine and Clopidogrel are from unit 3.”

The FDA had issued a warning letter after the company had voluntarily recalled certain products last year. These developments had impacted the sales in the past few quarters.

Regarding Unit 6 (maker of cephalosporin based products) a major revenue earner and under import alert since early last year, Aurobindo expected inspection sometime in September, or worst case before December.

“We have concluded what improvement was needed (spent capex of $5-7 million) and the consultant has validated. We have informed the FDA and are awaiting inspection and clearing the facility,” Govindarajan said replying to investors queries. The FDA consultant has been paid Rs 2-2.5 crore as professional fee during the quarter.

Apart from these, four inspections (two in APIs and two in finish dosages) were completed during the last quarter. Except unit 6 & 4 (new facility to make injectables), all the manufacturing facilities (around 16) have gone through the inspections, he added.

The company is hoping to get approvals and launch around 25 products during the year in the US market.


(This article was published in the Business Line print edition dated August 20, 2012)
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